chapter 8 (socio-3): policies, regulations, and laws

Chapter 8: Policies, Regulations, and Laws 189SOCIAL

■ Roughly one-fourth of forestacres sold to pay the Federal estatetax are converted to other, moredeveloped uses.

Cost-Share Programs■ Federal cost-share programsthat provide funding for refor-estation and management practiceson private forest land includethe Forestry Incentive Program,the Conservation Reserve Program,the Wetlands Reserve Program, theStewardship Incentives Program, theEnvironmental Quality IncentivesProgram, and the Wildlife HabitatIncentives Program.

■ Funding for reforestationand timber stand improvementprojects are available through Statecost-share programs in 8 of the 13Southern States: Alabama, Louisiana,Mississippi, North Carolina, SouthCarolina, Tennessee, Texas, andVirginia. Programs also have beenenacted in Oklahoma and Georgiabut have not been funded to date.Florida implemented two programsin past years, but these havebeen discontinued.

■ State cost-share programscontributed payments of about $6million for tree planting and timberstand improvement projects on about140,000 acres in 1993. In 2000,accomplishments were nearly double,with cost-share payments of about$13.5 million for projects on about278,000 acres. Cost-share paymentsand project acres in 2000 increasedover 1993 levels in all seven Stateswith programs in both surveyed years.

■ In 2000, about 87 percent of cost-share projects in Southern States wereaccomplished in Virginia, Mississippi,North Carolina, and Louisiana.

■ In addition to the regenerationand stand improvement assistanceprograms, Kentucky, North Carolina,Tennessee, and Virginia share costsfor water-quality protection practices.

Current-Use PropertyValuation■ In Southern States, forest isamong the classes of land eligiblefor current-use assessment.

■ Use-value laws, by themselves,have only a minor impact on land usedecisions. It appears that use-valuetaxation may, at best, delay but notprevent development of rural land.

Conservation Easements■ Over the past two decades,conservation easements have emergedas a popular tool for preserving openspace and keeping land in forest cover.

■ By 1996, conservation easementson an estimated 333,000 acres offorest land had been granted to privateland trusts in the Southern UnitedStates. While still influencing arelatively small portion of the region,growth in acquired acreage hasbeen accelerating in the 1990s.

Protective RegulatoryPolicies■ Most protective regulatory statutesapply to Federal and State land.

■ Few of the protective regulatorypolicies are specifically directed atmanaging private forests. In the vastmajority of cases, forestry is affectedonly when certain activities aredeemed to have the potential to impairwater quality, air quality, or criticalhabitat for endangered species.

■ Most forestry operations areexempted from the permit

Key Findings

Federal Income TaxIncentives

Since the Federal tax code wasenacted in 1913, provisions havebeen added to encourage improvedmanagement and stewardship ofprivate forest land; but forest ownersand policymakers believe additionalincentives still are needed.

■ Incentives that alter the taxtreatment of reforestation expenseshave the potential to improvemanagement and stewardship onnonindustrial private forests (NIPFs),because they are specifically linkedto reforestation of harvested areas.Examples of such incentives includeimmediate deduction of reforestationexpenses, enhanced amortizationprovisions, and Green Accounts.

■ Extending tax provisions andincentives already available to ownerswho manage their forest holdingsfor a profit to owners who manageprimarily for environmental orsocial purposes would encourageand enable additional owners tomake stewardship investments.

Federal Estate Tax■ An average of 87,000 transfersof forest estates occurs each year,nationwide. Some 59 million acres offorest land are transferred each year.

■ Forest owners are many timesmore likely than the U.S. populationin general to incur the Federal estatetax. Nationwide, about 2.6 millionacres of forest land must be harvestedand 1.4 million acres must be soldeach year to pay the Federal estate tax.

Chapter 8:Policies, Regulations,and LawsJames E. Granskog, Terry Haines, John L. Greene, Brian A. Doherty,Steven Bick, Harry L. Haney, Jr., Steverson O. Moffat, Jerry Speir, andJonathan J. Spink Southern Research Station, USDA Forest Service (Granskog,Haines, Greene, Dougherty, Moffat); Northeast Forests, LLC (Bick); Virginia Tech.(Haney); Tulane University (Spier); Rayonier, Southeast Forest Resources (Spink)

How do current policies,regulations, and lawsaffect forest resources

and their management?

Southern Forest Resource Assessment190

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requirements of Federal andState nonpoint-source pollutionprograms. Although provisions existto encourage operators to meetvoluntary best management practices(BMPs) and to bring polluters intocompliance, these rely more heavilyon education and technical assistanceand less on fines and penalties.

■ In the majority of instances,implementation and enforcementduties for Federal protectiveregulatory statutes have beendelegated to the States.

■ While meeting their environmen-tal objectives, protective regulatorypolicies reduce overall productionand raise unit costs for peoplewho are raising timber crops.

Local Ordinances■ As of 2000, county and municipalgovernments in 10 of the 13 SouthernStates had enacted a total of 346forest-related ordinances. This is amarked increase from 7 States and141 ordinances in 1992.

■ Most of the ordinances wereenacted in States experiencing rapidurban expansion. Georgia and Virginiatogether account for over one-halfof the total; Louisiana and Floridatogether account for an additionalone-fourth.

■ Regionwide, public propertyprotection ordinances account fornearly half of all ordinances. Nextmost common are special featureprotection ordinances, followed bytree protection ordinances, timberharvesting ordinances, and generalenvironmental protection ordinances.

Private Property Rightsand Right-to-Practice Acts■ Comprehensive property rightsprotection laws were enacted in 1995in Florida, Texas, and Virginia, andwere proposed but failed to be enactedin Alabama, Arkansas, North Carolina,and South Carolina. These laws: (1)assert landowners’ constitutionalrights for ownership and use of theirland, (2) provide for landownercompensation for regulatory takings,and/or (3) require economic impactassessments of potentially restrictiveproposed legislation or ordinances.

■ Private property rights protectionlaws specific to forest and farmlandwere enacted in Mississippi in 1994

and Louisiana in 1995. These laws:(1) assert landowners’ rights toconduct farm and forestry practices;(2) create a legal remedy for takingsat a threshold of 20 percent of valuereduction in Louisiana and 40 percentin Mississippi; and (3) in Louisiana,require an economic assessment ofproposed laws for takings impact.

■ Right to farm and practice forestrylaws were enacted in Florida, Georgia,Kentucky, Mississippi, North Carolina,Oklahoma, South Carolina, andVirginia from 1991 through 2000.These laws: (1) recognize the benefitsof forestry to the economy andecology of the State, (2) provideprotection from public and privatenuisance actions against landownersconducting forestry operations, and/or (3) limit local governments’ powerto enact ordinances and zoningregulations restrictive to forestry.

■ Right to prescribe burn lawswere enacted in Alabama, Florida,Georgia, Louisiana, Mississippi, NorthCarolina, South Carolina, Texas, andVirginia between 1990 and 1999.These laws: (1) recognize prescribedburning as a legal and ecologicallybeneficial operation, (2) establishburner training/certification programs,(3) protect landowners from nuisanceclaims for prescribed burning activity,and (4) limit burners’ liability fordamages and injuries.

Introduction

This chapter addresses an extremelybroad question. Southern forests andtheir management are influenced bya large body of legislation that stemsfrom all levels of government: Federal,State, and local. Some laws addressforests specifically, but many othersinfluence forest conditions indirectly.Measuring the impact of a particularlaw or regulation can be difficult, if notimpossible, except for programs thatprovide funding for specific actions andhave reporting requirements. To a largeextent, current forest conditions andtrends reflect the combined impactsof all legislation in effect over time.

The topics included in this chapteraddress concerns identified by thepublic as important aspects of theoverall question. Shown below are themajor components of this overall

question, the sections which addressthem, and the authors principallyresponsible for those sections:

a. The implications of the tax code onthe structure and management offorests. This item is addressed in thesections concerning Federal income taxincentives and the Federal estate tax,authored by John L. Greene.

b. The impacts of programs that aredesigned to encourage forestmanagement. This item is addressed inthe section on Federal and State cost-share programs, authored by TerryHaines and John L. Greene.

c. The effects of programs for keepingland in forest cover. This item isaddressed in the sections concerningcurrent-use property valuation,authored by Brian A. Doherty, and thesection on conservation easements,authored by James E. Granskog, StevenBick, and Harry L. Haney, Jr.

d. State laws and local regulationsthat define landowner responsibilitiesin managing forests. This item isaddressed by the section coveringprotective regulatory policies, authoredby Steverson O. Moffat and Jerry Speir;the section on local forest-relatedordinances, authored by Jonathan J.Spink, Harry L. Haney, Jr., and John L.Greene; and the section on privateproperty rights and right to practiceforestry acts in the South, authored byTerry Haines.

Federal IncomeTax Incentives

IntroductionThe Federal income tax dates

from 1913, shortly after ratificationof the 16th amendment to the U.S.Constitution empowered Congressto tax income “from whatever sourcederived” (Graetz 1997). In general,the provisions of the Internal RevenueCode (IRC) apply to private forestowners just as they do to othertaxpayers. Over time, however,provisions have been added toencourage improved managementof private forests:

■ Depletion deductions—whichrecognize that part of the priceowners receive from the sale of anatural resource is a recovery of their


investment in the resource rather thantaxable income—were first specificallyapplied to timber in the RevenueAct of 1919 (Siegel 1978).

■ Capital gain tax treatment wasoriginally available only to ownerswho sold their timber “lump-sum.”The Revenue Act of 1943 extendedcapital gain treatment to ownerswho dispose of their timber “withan economic interest retained,” eitherby selling it on a per-unit basis orharvesting it themselves and sellinglogs or wood products (Siegel 1978).

■ Federal cost-share programshelp forest owners afford the highup-front cost of investments in forestmanagement and stewardship.Programs currently available includethe Forestry Incentive Program,the Conservation Reserve Program,the Wetlands Reserve Program, theStewardship Incentives Program,the Environmental Quality IncentivesProgram, and the Wildlife HabitatIncentives Program. The programsthemselves are not income taxprovisions, since 1979 IRC Section126 permits forest owners to excludea calculated part of qualifying cost-share payments from their grossincome (Haney and others 2001).

■ Reforestation incentives—a 10-percent tax credit on and amortizationover 8 tax years of up to $10,000of reforestation expenses per year—were enacted in Public Law 96-451of 1980 (Haney and others 2001). Theeffect of these provisions is to reduce oreliminate the need for forest owners tocapitalize reforestation expenses overthe life of a stand.

Nevertheless, forest owners andpolicymakers alike continue to arguethat additional incentives are neededto encourage improved managementand stewardship of NIPFs. In studiesconducted in 1997 and 2000, theForest Law and Economics ResearchUnit of the USDA Forest Service,Southern Research Station, analyzedthe economic effect of several incentivesthat have been proposed, including:

■ income averaging;

■ reducing the tax rates for long-termcapital gains;

■ enhancing the amortizationprovisions for reforestation expenses;

■ permitting deduction ofreforestation expenses in the year theyoccur;

■ establishing Green Accounts, inwhich forest owners can accumulatepretax dollars to pay upcomingreforestation or managementexpenses; and

■ stewardship investment provisionsfor qualified conservation-relatedinvestments in forest management.

MethodsA series of computer spreadsheets

was developed to determine the effectof the proposed incentives on Federaltax receipts and cash flow to “typical”NIPF owners. The hypothetical ownerswere assumed to be a married couplewho (1) own 100 acres of forest land,(2) file joint tax returns, (3) have$40,000 of other income and $6,900in other deductions annually, and(4) have no dependent children.The $40,000 income level closelyapproximates the median householdincome for noncorporate private forestowners in the United States (Personalcommunication. 1997. T.W. Birch,USDA Forest Service, NortheasternResearch Station, 11 Campus Blvd.,Newtown Square, PA 19073). Weassumed no dependent childrenbecause over half of private forestowners are at or near retirementage (Haney and Siegel 1993,Sampson and DeCoster 1997).

The spreadsheets were constructedaround management plans developedfor each of the three major southerntimber types: loblolly pine, bottomlandhardwood, and upland hardwood. Theplans specified practices and rotationlengths representative of those usedby nonindustrial forest owners in theregion. The plans did not, therefore,optimize financial return or fiberproduction, but used fundamentalpractices to maintain a relativelyhigh timber growth rate over asawtimber rotation.

The personal exemptions and rateschedules used to calculate the Federalincome tax were for the 1997 tax year.The $6,900 amount used for otherdeductions equaled the Federal 1997standard deduction for a marriedcouple filing jointly. State and localtaxes were included in the analysisbecause they affect both cash flowto the owners and Federal taxable

income; the rates used were typicalfor a Southern State (Greene 1995).

No increases were assumed for costs,returns, or tax rates. Both the owners’personal discount rate and the interestrate earned by Green Accounts wereassumed to be 4 percent after inflation.

Data SourcesManagement costs for the loblolly

pine timber type were taken from the“Forest Farmer 30th Manual Edition”(DuBois and others 1995) and adjustedto reflect a small ownership. Pinesawtimber and pulpwood stumpageprices were 1995 regional averageprices for the Southern United Statesas reported in “Timber Mart-South”(Norris 1995). The managementplan was developed using theCOMPUTE_MERCHLOB growth-and-yield model (Busby and others 1990).The costs, returns, and managementplan for the bottomland hardwoodtimber type were adapted fromAmacher and others’ (1997) findingsfor Nuttall oak. The costs, returns,and management plan for the centralAppalachian hardwood timber typewere provided by G.W. Miller (PersonalCommunication, 1997. G.W. Miller,USDA Forest Service, NortheasternResearch Station, 11 Campus Blvd.,Newtown Square, PA 19073).

ResultsIncome averaging—The form of

income averaging analyzed wouldpermit forest owners to treat incomefrom a commercial thinning or timberharvest as if it were paid in three equalannual installments, beginning in theyear of the sale. The tax schedule forlong-term capital gains has two tiers:(1) amounts in the bottom tax bracket(for 1997, amounts up to $41,200minus the owners’ taxable ordinaryincome) are taxed at 10 percent, and(2) additional amounts are taxed at 20percent. Under income averaging, thiscalculation is made in each of the 3years to which timber sale income isattributed, so that three times as muchincome qualifies to be taxed at thelower rate. Because the incentive altersthe owners’ adjusted gross incomefor each year over which income isaveraged, State income tax also isaffected. Income averaging wouldprovide a modest benefit to ownersin each of the three timber types(table 8.1) (Greene 1998).


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Table 8.1—Comparison of Federal income tax incentives by timber type

Reducing the tax rates for long-term capital gains—The 1997Taxpayer Relief Act reintroduced theconcept of preferential treatment forlong-term capital investments andreduced Federal tax rates for long-termcapital gains. The incentive analyzedwould lower the rates further, to halfthose for ordinary income. Such anadjustment to Federal tax rates has noeffect on State taxable income or taxdue. Reducing the tax rates for long-term capital gains would provide asubstantial benefit to owners in allthree timber types (table 8.1), withthe entire cost borne at the Federallevel (Greene 1998).

Enhancing the amortizationprovisions for reforestationexpenses—The incentive analyzedwould further reduce the need for forestowners to capitalize the high up-frontcost of investments in forestmanagement by doubling the amountof reforestation expenses that can beamortized (from $10,000 to $20,000)and compressing the recovery periodfrom 8 to 6 tax years. The reforestationtax credit—10 percent of the first$10,000 of qualifying expenses—was assumed to be unchanged. Theincentive would provide the greatestbenefit to owners with reforestationexpenses above the $10,000 amount

that can be amortized under currentlaw. Such cost levels are typical forloblolly pine and bottomland hard-wood management. Owners withreforestation expenses under $10,000would derive a small benefit fromthe shortened recovery period (table8.1) (Greene 1998).

Permitting deduction ofreforestation expenses—Permittingforest owners to deduct reforestationexpenses as they occur would eliminatethe need to capitalize any of the highup-front costs associated with forestmanagement. Reforestation expenseswould be on a par with propertytaxes, interest, and forest managementexpenses, which can be deducted in theyear they occur. This incentive wouldprovide a modest benefit to ownerswhose reforestation expenses areabove the $10,000 amount that canbe amortized under current law. Itwould not benefit owners whosereforestation expenses already canbe fully amortized (table 8.1)(Greene 1998).

Establishing Green Accounts—Twotypes of Green Accounts were analyzed:one modeled after a traditional IRA,and the other modeled after thecafeteria-plan Medical Saving Accountsavailable to many taxpayers throughtheir employers. Either type ofaccount would enable forest ownersto pay reforestation costs that cannotbe amortized with pretax dollars,eliminating the need to capitalizethem. For this reason, benefits fromthis incentive follow the same patternas for deduction of reforestationexpenses, except they are largerbecause reforestation expenses arepaid with pretax dollars. Again, theincentive would provide no benefitto owners whose reforestation expensesalready can be fully amortized undercurrent law (table 8.1) (Greene 1998).

Stewardship investment taxprovisions—An increasing numberof NIPF owners hold and managetheir land primarily to produce socialor environmental benefits (Birch 1996).The IRC, however, provides favored taxtreatment only to owners who managetheir forests to produce marketableproducts or services. Expanding fourprovisions of the IRC would afford thesame tax treatment to all owners whoreceive cost-share assistance fromqualified Federal or State programs toactively manage their forests, whether

Timber type

Loblolly Bottomland UplandIncentives pine hardwood hardwood

- - - - - - - - -Dollars - - - - - - - - -A. Current law

Present value of Federal income tax receipts 11,202 8,669 4,774Present value of cash flow to the owners 48,410 28,079 18,873

B. Further reduced tax rates for long-term capital gainsPresent value of Federal income tax receipts 6,502 4,953 2,382Difference from current law -4,699 -3,716 -2,392Present value of cash flow to the owners 53,110 31,795 21,265Difference from current law 4,699 3,716 2,392

C. Income averagingPresent value of Federal income tax receipts 9,267 7,687 3,836Difference from current law -1,935 -982 -938Present value of cash flow to the owners 50,557 29,214 19,911Difference from current law 2,147 1,135 1,039

D. Enhanced reforestation amortization provisionsPresent value of Federal income tax receipts 10,077 7,180 4,736Difference from current law -1,125 -1,490 -38Present value of cash flow to the owners 49,943 30,202 18,926Difference from current law 1,533 2,123 53

E. Immediate deduction of reforestation expensesPresent value of Federal income tax receipts 10,838 8,074 5,016Difference from current law -363 -595 242Present value of cash flow to the owners 49,340 29,380 18,848Difference from current law 930 1,301 -24

F. Green accountPresent value of Federal income tax receipts 9,881 7,151 4,774Difference from current law -1,321 -1,518 0Present value of cash flow to the owners 50,181 30,196 18,873Difference from current law 1,771 2,117 0

G. Stewardship investment provisionsPresent value of Federal income tax receipts 10,052 7,560 3,756Difference from current law -1,150 -1,109 -1,018Present value of cash flow to the owners 48,410 28,079 18,873Difference from current law 0 0 0

Source: Sections A through F—Greene 1998; section G—Greene and Beauvais (2002).


they manage for environmental orsocial benefits, or for profit:

■ that all owners who receivequalified cost-share assistance toestablish or reestablish trees maytake the reforestation tax credit aspermitted under IRC Section 48 andamortize their out-of-pocket expensesfrom the practice, as permitted underSection 194;

■ that all owners who receive qualifiedcost-share assistance to establish treesmay exclude from their gross incomethe full amount of the paymentpermitted under Section 126;

■ that all owners who receive qualifiedcost-share assistance to carry out forestmanagement practices may deducttheir out-of-pocket expenses for thepractices, as permitted under Section212; and

■ that all owners who receive qualifiedcost-share assistance to establish ormanage trees may deduct the fullamount of their basis in trees lostin a casualty, condemnation, or theft,as permitted under Section 165.

In each case, owners who coulddemonstrate that they did not havea profit motive would qualify for theprovision on the basis of having madean approved stewardship investment.These provisions would afford littleadditional cash flow to the owners,since many of the cost-share practiceswill not yield marketable products(table 8.1) (Greene and Beauvais2002). But they would benefit ownersin all three timber types by reducingthe cost of making environmentallybeneficial stewardship investments.

Discussion and ConclusionsThe first and second incentives alter

the amount of Federal income tax duefrom a timber sale. A reduction in thetax rates for long-term capital gainswould provide a substantial benefit toforest owners in all three timber types.Because it is a general provision thatapplies to all types of businesses andinvestments; however, the reductionwould cause a large decrease in Federaltax receipts. Income averaging over3 years would yield a more modest,targeted benefit to owners in all threetimber types. The additional cashflow these incentives provide wouldenable nonindustrial forest ownersto improve the level of management

and stewardship. But the incentiveswould be available to all ownerswho sell timber, whether or notthey manage their forest.

The third, fourth, and fifth incentivesalter the tax treatment of reforestationexpenses. All three incentives wouldbenefit owners with reforestationexpenses above the $10,000 amountthat can be amortized under currentlaw. The financial benefit providedby enhanced amortization provisionsor a Green Account would be larger,and that provided by deduction ofreforestation expenses in the year theyoccur smaller. Enhanced amortizationprovisions also would provide a smallbenefit to owners with reforestationexpenses that can be fully amortized.These incentives are specifically tiedto reforestation of harvested areas.For this reason, they have the potentialto promote changes in owners’management behavior and improvethe overall level of management andstewardship on NIPFs.

The final incentive would extendprovisions already present in theFederal tax code to an additional classof owners: those who manage theirforest primarily for environmental orsocial purposes. The incentive wouldprovide owners little or no economicbenefit, but would encourage andenable owners in all timber typesto make environmentally beneficialstewardship investments.

Ideally, components of a Federal taxpolicy to improve NIPF managementwould be politically acceptable, causeminimal reductions in tax receipts,require no fundamental changesto the tax code, specifically targetprivate forests, benefit owners in alltimber types, and be tied to forestmanagement. Of the incentivesanalyzed, only enhanced amortizationprovisions for reforestation expensesmight satisfy all of these criteria.But four additional incentives: (1)income averaging, (2) deduction ofreforestation expenses in the yearthey occur, (3) Green Accounts, and(4) stewardship investment provisionsmeet enough of the criteria that theyalso merit consideration.

Needs for AdditionalResearch

Fundamental research is needed toassess landowner use of the incentives

for improved forest management andstewardship that are already present inthe Federal tax code. There also will bea continuing need to analyze the effectsof incentives proposed since the studiessummarized here were conducted.To date, these include an inflationadjustment for timber capital gainsand a partial capital gain exclusion.An additional class of incentives thatmight be developed would encourageforest owners to work in concert todevelop and pursue management planson a landscape scale. Such incentiveswould address the issues of urbansprawl, forest fragmentation, wildlifehabitat requirements, and biodiversity.

The Federal Estate Tax

IntroductionThe Federal Government has

taxed the transfer of estates fromone generation to another since 1916(Haney and Siegel 1993). To preventmost estates from being affected by thetax, gifts up to $10,000 per recipientper year, plus other lifetime gifts andestate values below the amountshielded by the unified credit effectiveexemption are not taxed. In recentyears, however, the number andpercent of estates that owe Federalestate tax have increased markedly(Herman 2001).

To address this situation, the newlyenacted Economic Growth and TaxRelief Reconciliation Act of 2001increases the unified credit effectiveexemption from $675,000 to $1million beginning in 2002, andgradually reduces the top rate forFederal estate and gift taxes from 55 to45 percent by 2009. The Act eliminatesthe estate tax entirely and sets the toptax rate for gifts equal to the topindividual income tax rate beginning in2010. But the Act itself is scheduled to“sunset” at the end of 2010, returningestate and gift taxes to prior law(Manning and Windish 2001).

There are reasons to believe theFederal estate tax has a greater effecton forested estates than on estates ingeneral. Increasing stumpage prices(Morrow and Fritschi 1997) and urbanexpansion (Harris and DeForest 1994,U.S. Department of Commerce 1992)are driving up the value of both thetimber and land components of forest


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land. Further, the requirements forspecial use valuation, a provision thatpermits rural land to be assessed forestate tax purposes at its value in userather than its highest and best use,are difficult to meet, particularlyfor managed forests.

Beyond anecdotal evidence, however,little information is available on theeffect of the estate tax. A handful ofcase studies used hypothetical familiesand forest holdings to investigateaspects of the transfer of forest estates,including: (1) the size of a forest thatcan be transferred without incurringa tax (Sutherland 1978), (2) the effectof the estate tax on returns to forestmanagement (Sutherland and Tedder1979), (3) the effect of using special usevaluation on the net value of a forestestate (Gardner and others 1984),and (4) the interaction between Federaland State estate and inheritance taxes(Peters and others 1998, Walden andothers 1987). In addition, Howard(1985) studied the effect of form offorest ownership and assets used topay the estate tax on returns from theforest, and two studies have examinedthe effect of the estate tax on transfersof large forest holdings (Lucas 1963,Northern Forest Lands Council 1994).

The Mississippi State University,College of Forest Resources, and theForest Law and Economics ResearchUnit of the USDA Forest Service,Southern Research Station, arecooperating in a study to gauge theeffect of the Federal estate tax onnonindustrial forests and other ruralland holdings. It is the first attemptto quantify the effect of the Federalestate tax on rural land.

MethodsData for the study were collected

by means of a mailed questionnaire,using the Dillman (1978) TotalDesign Method. The questionnairewas pretested with a 100-percentsurvey of members of the MississippiForestry Association. Following thepretest, randomly selected membersof two national forest owner groups—the American Tree Farm Systemand the National Woodland OwnersAssociation—were surveyed.

This report summarizes key findingsfrom the two national samples andcontrasts them to the results fromMississippi, which is assumed tobe a representative Southern State.

Response RatesThe combined response rate for the

two national forest owner groups was46 percent. Although most membersof both groups are NIPF owners, theirresponses to questions regardinglocation of the land, form of ownership,and value of the gross taxable estatediffered statistically from one another.Stratifying the responses by regionaccounted for these differences. Theresponse rate for Mississippi ForestryAssociation members was 66 percent.

ResultsNational forest owner groups—

Eighty-three percent of the surveyrespondents from the national sampleswere members of the deceased owner’sfamily. Nine percent were involvedin the transfer of a forest estate duringthe 11 years prior to 1998, a periodwhen the applicable credit shielded$600,000 of estate value from theFederal estate tax.

Seventy-nine percent of the deceasedowners held their forest in fee simpleor jointly with a family member. Sixty-three percent had used the servicesof a financial or legal professional toplan their estate; in 60 percent of thecases, their heirs believed that using aprofessional reduced the estate tax due.

Only 33 percent of the estatesqualified for and 25 percent appliedspecial use valuation. In 74 percentof the cases when special use valuationwas used, it was applied to both theland and timber. The value of theestate typically was reduced to anamount well below the $750,000maximum for the provision.

Thirty-six percent of the estatesowed Federal estate tax. In 44 percentof the cases where Federal estate taxwas due, timber or land was sold topay part or all of the tax. Some 75percent of timber sales and 57 percentof the land sales occurred because otherestate assets were inadequate to pay thetax. The size of forest estates in whichtimber or land had to be sold to paythe estate tax ranged from under 100acres to several thousand acres,averaging over 500 acres.

Mississippi Forestry Association—The results of the survey of MississippiForestry Association members differedfrom those of the national forest ownergroups in several respects. A largerfraction of the respondents in

Mississippi (14 percent) were involvedin the transfer of an estate during thesurvey period, and a smaller fractionof the deceased owners (43 percent)had used the services of a professionalin planning their estates.

Eight percent of the estates in theMississippi survey qualified for andonly 5 percent made use of specialuse valuation. In just 27 percent of thecases where Federal estate tax was due,land or timber was sold to pay part orall of the tax. Eighty-nine percent of thesales, however, occurred because otherestate assets were inadequate to pay thetax. Of the acres of land sold, 67percent was converted to other,more developed uses.

Discussion and ConclusionsThe effect of the Federal estate tax

on forest estates can be estimatedon a national basis by applying thenumber of private forest ownershipunits from Birch (1996) to the surveyfindings. It should be noted thatmany of the resulting estimates arebased on small samples and shouldbe considered rough indicators ratherthan scientific estimates.

From the calculation, it appears thatan average of 87,000 transfers of forestestates occur each year, nationwide.The amount of forest land transferredis estimated at 59 million acres per year.

It appears that about 19,000 forestestates per year make use of specialuse valuation. Typically, the procedureis applied to both land and timber. Inmany instances, this may be necessaryto meet the requirements for use ofthe provision, but doing so precludesharvesting of timber for 10 years.

Forest owners are much more likelythan the U.S. population in generalto incur the Federal estate tax. Theamount of forest land that must beharvested each year to pay the taxappears to be on the order of 2.6million acres, and the amount of forestland that must be sold each year topay the Federal estate tax appearsto be on the order of 1.4 million acres.Of the acres of land sold, it appearsthat roughly one-fourth is convertedto other, more developed uses.

To the extent that Mississippiis representative of the region, asmaller fraction of forest estates inthe South may qualify for or make useof special use valuation than in other


KY

AR

OK1996

FL

GA1996TX

1981

TN1997

LA1998

AL1985

MS1974

SC1981

NC1978

A1970V

Current programsUnfunded programsNo programs

Table 8.2—Features and accomplishments of State forestry cost-share programs

SiteCost-share Maximum productivity Ownership

State programs rate payment ranking limits Project limits

Percent Dollars - - - - - - - - - - Acres - - - - - - - - -

Alabama Agricultural and ConservationDevelopment Program 60 3,500/yr No 20 min. 1 min.

Louisiana Forest Productivity Program 50 10,000/yr No None NoneMississippi Forest Resources Development Program 50-75 5,000/yr No None NoneNorth Carolina Forest Development Program 40-60 None No None 1 min. to 100 max.South Carolina Forest Renewal Act 40 None Yes None 100 max.Tennessee Reforestation Incentives 50 5,000/yr Yes1 None NoneTexas Reforestation Foundation Program 50 None Yes 1,000 max. 10 min.Virginia Reforestation Timberlands Act 40 75/ac No None 1-5 min. and 500 max.

yr = year; min. = minimum; max. = maximum; ac = acre.1 erodible lands.

U.S. regions. Also, in the cases whereFederal estate tax is due, a smallerfraction of estates in the South may selltimber or land to pay part or all of thetax. It appears, however, that a largerfraction of the acres sold is convertedto other, more developed uses.


The study summarized here presentsseveral avenues for development ofa coordinated estate tax relief policyfor forest owners, but additional workis needed to address its statisticalshortcomings by obtaining a largerand broader sample of NIPF owners.

AcknowledgmentsOther persons involved in the study

were Tamara Cushing, F&W ForestryServices, Inc., Albany, GA; SteveBullard, Professor of Forest Economics,Mississippi State University, Collegeof Forest Resources, Mississippi State,MS; and Ted Beauvais, NaturalResources Planning Specialist, USDAForest Service, Cooperative Forestry,Washington, DC. At the time thesurveys were conducted Ms. Cushingwas a graduate research assistant atMississippi State University, Collegeof Forest Resources.

Federal and StateForestry Cost-Share

Programs

IntroductionNonindustrial private forest

landowners play a vital role insustaining forest resources. In 1997,NIPF land provided about 50 percent ofthe softwood harvest and 75 percent ofhardwood harvest nationwide (Haynes,in press). As timber harvests fromFederal land have been reduced inrecent years, the supply of timber fromNIPF land has become more crucial.

Two important barriers to NIPFlandowner investments to optimizeforest productivity are the lack ofup-front capital and low expectedrates of return. Cost-share programsare designed to help NIPF landownersby reducing their initial costs forreforestation and improving ratesof return.

Federal cost-share funding wasinsufficient to meet the needs of NIPFlandowners in many Southern States.Several Southern States, therefore,established forestry cost-share programsin the 1970s and 1980s (tables 8.2and 8.3). Funding for these programsincreased more than 60 percentbetween 1981 and 1985 (Bullard and

Figure 8.1—State level cost-sharing programs to improve timber productionon nonindustrial private forest lands. Dates of enactment are shown.


SOCIAL Table 8.3—Funding and accomplishments of State forestry cost-share programs

AnnualAnnual cost-share payments accomplishments,

State program and for reforestation and timber reforestation, and Trends indate implemented Source of funding stand improvement timber stand improve. funding

Dollars Acres

Alabama Agricultural andConservation DevelopmentProgram, 1985 General State fund 750,000 21,300 Slightly

increasing

Louisiana Forest ProductivityProgram, 1998 Timber severance tax 4,100,000 50,000 Variable with

severance taxreceipts

Mississippi Forest ResourcesDevelopment Program, 1974 Timber harvest tax 3,000,000 63,588 Variable

North Carolina ForestDevelopment Program, 1978 Timber harvest tax and

State general funds 2,200,000 52,000 Increasing

South Carolina ForestRenewal Act, 1981 Timber harvest tax and

State general funds 657,438 6,494 Stable

Tennessee ReforestationIncentives Program, 1997 Real estate transfer

receipts 160,000 2,500 Variable withreal estatemarket

Texas ReforestationFoundation Program, 1981 Voluntary forest

industry assessmenton primary products 350,000 7,000 Stable

Virginia ReforestationTimberlands Act, 1970 State general funds

and harvest tax 2,253,546 75,900 Stable

Straka 1988). Two States, Louisianaand Tennessee, implemented programsin the late 1990s.

The largest State programs in terms ofpayments and acreage treated are in theSouth. Southern States with programsinclude Alabama, Louisiana, Florida,Mississippi, North Carolina, SouthCarolina, Tennessee, Texas, and Virginia(fig. 8.1). Outside the South, as of1994, cost-share assistance programsfor timber production had beenestablished only in California, Illinois,Iowa, Maryland, Minnesota, andOregon (Haines 1995).

Methods and Data SourcesHaines (1995) comprehensively

reviewed Federal and State cost-shareprograms. For the present Assessment,therefore, the need was for updatingthat work. To do so, informationabout Federal cost-share programswas collected from the Internet sitesof the U.S. Department of Agriculture(USDA) agencies that administer eachof the six programs. Data on Stateprograms were obtained by sendinga questionnaire to officials in each ofthe 13 Southern States. Officials werequeried about any changes in theirState’s cost-share programs since1994 and for information about any

programs enacted since 1994. Topicscovered in the questionnaire included:(1) landowner eligibility requirementsand limitations, (2) cost-share rates,(3) eligible management practices,(4) funding sources and annuallevel of funding, (5) annual cost-share payments, (6) project acresaccomplished, and (7) outlookfor continuation or expansionof the program.

All but 2 of the 13 State officialscontacted completed the questionnaire.Through phone contacts with officialsin the two nonreporting States, thenecessary information was obtained.


ResultsThe State agency responses to

the questionnaire and informationfrom Federal program Internet siteswere compiled and summarized todescribe features and accomplishmentsfor each program.

Federal cost-share assistanceprograms—Federal cost-shareassistance programs for forestry projectsinclude the Forestry Incentive Program,the Conservation Reserve Program,the Wetlands Reserve Program, theStewardship Incentives Program,the Environmental Quality IncentivesProgram, and the Wildlife HabitatIncentives Program.

Forestry Incentive Program (FIP)—FIP was established by the CooperativeForestry Assistance Act of 1978 toencourage timber production andthe use of good forest managementpractices on NIPF land. It sharescosts for practices associated with treeplanting, timber stand improvement,and site preparation for naturalregeneration. To be enrolled, landmust be suitable for afforestation,reforestation, or improved forestmanagement and be located in acounty identified by the USDA ForestService as suitable for growing timberproducts. Participants generally mustown between 10 and 1,000 acres ofeligible land (exceptions for up to5,000 acres can be authorized) andcannot be engaged primarily inmanufacturing forest products orproviding public utility services.

State forestry agencies have the leadrole in implementing FIP. The agencieshelp participants develop forestmanagement plans and, if necessary,help them find vendors to performpractices called for in the plans. Someagencies have arranged for some or allmanagement plan development workto be done by consulting foresters.The agencies also must certify thatpractices are completed satisfactorilybefore cost-share payments can bemade. Payments are limited to $10,000per participant per year and are notto exceed 65 percent of the cost ofpractices performed.

FIP is administered by the USDAForest Service and the NaturalResources Conservation Service(NRCS) in cooperation with the StateForesters. Fiscal year (FY) 1997 fundingfor the program was $6.3 million.

Conservation Reserve Program(CRP)—CRP was established by the1985 Food Security Act to converthighly erodible cropland and otherenvironmentally sensitive land toprotective vegetative cover. It sharescosts for establishing long-termresource-conserving cover, land rentalpayments under 10- to 15-yearcontracts, and incentive payments toencourage wetland restoration or useof continuous sign-up provisions. To beenrolled in CRP, land must be croplandthat is defined as erodible or associatedwith noncropped wetlands or marginalpastureland that is suitable for use as ariparian buffer. Applicants generallymust have owned or operated the landfor at least 12 months; new ownersmust have inherited the land, acquiredit as the result of a foreclosure, orbe able to show that they did notacquire the land for the purpose ofplacing it in CRP.

Applicants offer bids for CRPcontracts, which are ranked andselected for funding based on theEnvironmental Benefits Index (EBI).The EBI rates the relative environmentalbenefits of land according to severalfactors, including wildlife habitat,water, and air quality benefits; on-farm benefits of reduced erosion;probable long-term benefits; and cost.Establishing a tree cover consistentlyrates at or near the top of the EBI scale.Payments are limited to 50 percentof the cost of practices performed,with an incentive of an additional 25percent available for practices to restorewetlands. Land rental payments arebased on the relative productivity ofsoils in the county, with an incentive of10 to 20 percent available to encouragelandowners who implement specificenvironmentally related practices totake advantage of continuous sign-upprovisions. CRP is administered bythe Farm Service Administration (FSA).FY 1997 funding was $200 millionfor cost-shares, land rental payments,and incentives.

Wetlands Reserve Program(WRP)—This program also wasestablished by the 1985 Food SecurityAct to restore lost or degraded wetlandhabitat on private land. It operatesby purchasing permanent or 30-yearconservation easements on qualifyingwetlands, or by providing cost-shareassistance under agreements lasting10 years or more. To be enrolled, land

must be privately owned, restorable,and suitable for wildlife benefit.Wetland converted after December23, 1985, land with timber standsestablished under a CRP contract, andland where restoration is not possibleare excluded from the program.Participants must have owned the landfor at least 1 year or be able to showthat they did not acquire the land forthe purpose of placing it in WRP.

The NRCS assists participants todevelop plans to restore their wetland.Participants agree to limit futuredevelopment of their land, but retainownership, control over access, theright to lease the land for undevelopedrecreation, and, with approval, the rightto use it for activities compatible withWRP, such as grazing, cutting hay, orharvesting timber. There are definedlimits on the amount that can bepaid for a conservation easement; theUSDA pays all restoration costs undera permanent easement and 75 percentof restoration costs under a 30-yeareasement. Payments under a cost-shareagreement cannot exceed 75 percentof the cost of practices performed.

WRP is administered by the NRCS incooperation with FSA. Funding for theprogram in FY 1997 was $76 million.

Stewardship Incentives Program(SIP)—This program was establishedby the 1990 Farm Bill to encouragemultiple resource management on NIPFland. It provides technical and cost-share assistance to implement practicescalled for in a Forest Stewardship Plan.To be enrolled, land must be rural andforested or suitable for growing trees.Participants can be any type of legalprivate entity, including an individual,group, association, corporation, orAmerican Indian tribe. They generallymust own no more than 1,000 acres ofeligible land, although exceptions forup to 5,000 acres can be authorized.

The State forestry agency helpsparticipants develop Forest StewardshipPlans. Participants agree to maintaintheir land as described in their planand to maintain and protect SIP-fundedpractices for at least 10 years. SIP costshares can help pay for a variety offorest management activities, includingdevelopment of the Forest StewardshipPlan; reforestation and afforestation;forest and agroforest improvement;establishment, maintenance, andimprovement of hedgerows; protection


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and improvement of soil, water,riparian areas, or wetlands; andenhancement of fisheries habitat,wildlife habitat, or recreation. Paymentsare limited to $10,000 per participantper year and cannot exceed 75 percentof the cost of practices performed.

SIP is administered by the USDAForest Service in cooperation withthe State forestry agencies. Fundingin FY 1997 was $6.5 million. Theprogram has not been funded forthe past 3 fiscal years.

Environmental Quality IncentivesProgram (EQIP)—EQIP wasestablished by the 1996 Farm Billto assist farm and ranch owners inaddressing natural resource problemsthat pose a significant threat to soil,water, or related resources. It providestechnical help and cost-share assistanceunder 5- to 10-year contracts to enableowners to implement practices calledfor in a conservation plan, andincentive payments for up to 3 yearsto encourage adoption of desired landmanagement practices. To participatein EQIP, land must be farm or ranchland and applicants must be engagedin livestock or agricultural production.Owners of large confined livestockoperations—generally over 1,000animal units—cannot receive cost-share assistance for animal wastestorage or treatment facilities,but they can receive assistancefor other conservation practices.

The NRCS assists applicants todevelop site-specific conservation plansthat address locally identified naturalresource concerns. At designated timesduring the year, plans are ranked andselected according to their potentialenvironmental benefit weighed againsttheir cost. Priority is given to practiceswhere State or local governmentsprovide technical or financial assis-tance, and to practices that will helpproducers comply with Federal orState environmental laws. Cost-sharepayments cannot exceed 75 percentof the cost of practices performed;cost-share and incentive paymentscombined are limited to $10,000per participant per year or $50,000over the life of a contract.

EQIP combines and replaces fourearlier Federal assistance programs: (1)the Agricultural Conservation Program,(2) the Water Quality IncentivesProgram, (3) the Great PlainsConservation Program, and (4) the

Colorado River Basin Salinity ControlProgram. The program is administeredby the NRCS in cooperation with FSA.Funding was $200 million in FY 1997.

Wildlife Habitat IncentivesProgram (WHIP)—This programalso was established by the 1996 FarmBill to encourage development andimprovement of wildlife habitat onprivate land. It provides technical andcost-share assistance under 5- to 10-year agreements to implement practicesassociated with wildlife habitatimprovement. Any non-Federal landcan be enrolled in WHIP, unless it isenrolled in another conservationprogram, it is subject to an EmergencyWatershed Protection Programfloodplain easement, or success withhabitat improvement efforts is unlikely.Participants must own or controlthe land under consideration.

The NRCS assists participants todevelop wildlife habitat developmentplans. Participants agree to installand maintain the practices called forin their plan and to allow NRCS accessto monitor effectiveness. Cost-sharepayments cannot exceed 75 percentof the cost of the practices performed,and generally are $5,000 or less perparticipant per year.

WHIP is administered by the NRCS.A multi-year appropriation passedin FY 1997 averaged approximately$8 million per year.

State forestry cost-share assistanceprogram—Funding for reforestationand timber stand improvement projectsare available through State cost-shareprograms in 8 of the 13 SouthernStates: Alabama, Louisiana, Mississippi,North Carolina, South Carolina,Tennessee, Texas, and Virginia. State-level programs also have been enactedin Oklahoma and Georgia but havenot been funded to date. Florida hasimplemented programs in past years,but they have been discontinued. Inaddition to the reforestation and standimprovement assistance programs,four States—Kentucky, North Carolina,Tennessee, and Virginia—haveimplemented cost-share programsfor water-quality protection practices.

Alabama cost-share program—The Alabama Agricultural andConservation DevelopmentCommission Program was enactedin 1985, in response to cutbacks infunding for Federal conservation and

reforestation cost-share programs.The program is administered by theAlabama Agriculture and ConservationCommission. The Alabama ForestryCommission provides technical supportfor forestry practices. Funding isprovided through State general funds.Eligible land includes private, State,and other non-Federal public holdingsof 20 acres or more, with a minimumtreatment area of 1 acre. Approvedforestry practices include tree planting,site preparation, natural regeneration,timber stand improvement, prescribedburning, permanent fire lineconstruction, and some soil andwater-quality protection practices.The cost-share rate is up to 60 percent,with a maximum payment of $3,500per year. Most practices must bemaintained for 10 years; 5 years ofmaintenance are required for timberstand improvement. Practice prioritiesare determined by the local soil andwater conservation districts.

In 2000, disbursements totaling$750,000 were made for reforestationand timber stand improvements onabout 20,000 acres—more than doublethe 1994 disbursement of $349,000.Small increases in future fundingare anticipated.

Florida cost-share program—No State-level cost-share programsare currently available in Florida, andnone are anticipated in the near future.As a result of USDA Forest Serviceinventory reports indicating overcuttingof baldcypress in Florida’s panhandleregion, the Federal FIP program hasbeen restructured to give highestpriority to landowner projects forcypress plantings.

The Florida Reforestation IncentivesProgram was established through a jointagreement between the Florida Divisionof Forestry and the Florida ForestryAssociation in 1981 to encouragereforestation on private land byproviding reimbursement for seedlingcosts. The program was discontinued in1993 due to budget cuts at the divisionof forestry and the resulting closureof all but one State tree nursery.

The Florida Plant a Tree Trust FundProgram, which was established in1991 to increase urban tree plantingand rural reforestation and wasadministered by the Florida Divisionof Forestry, has also been discontinued.Funding began in 1995 with a


contribution of $70,000 from theSunshine Gas Pipeline Company,a natural gas transmission companyutilizing rights-of-way in the State.Eligible applicants included localgovernments, nonprofit organizations,and private landowners owning orcontrolling parcels of at least 10and no more than 1,000 acres.

Kentucky cost-share program—The Kentucky Soil and Water QualityCost-Share Program was initiatedin 1994 to promote agriculturalconservation practices. Initial fundingof $500,000 was provided throughan increase in the State pesticideregistration fee. In 2000, legislativeappropriations of $2,150,000 fromgeneral funds and $9 million fromtobacco settlement funds provided atotal of $11,150,000 for the program.Practices are prioritized, and funds areallocated to the conservation districtsaccordingly. Currently, agriculturalwaste control practices are givenhighest priority. Approved forestryprojects are generally for installationof BMPs. Twenty applicants requesteda total of $64,379 in cost-share fundsfor forestry practices during 2000.Nine of the projects were fundedfor a total of $29,025.

Louisiana cost-share program—The Louisiana Forest ProductivityProgram was initiated in 1998 inresponse to concerns about possibleshortages in future timber supplies. Theprogram provides financial assistance tolandowners for the establishment andimprovement of tree crops. Fundingis provided through a portion of theState’s timber severance tax. To beeligible for the program, landownersmust own a minimum of 5 contiguousacres suitable for growing commerciallyvaluable timber species; no maximumownership size limits participation.Landowners may receive 50 percentof the cost of reforestation and timberstand improvement for stand releaseup to $10,000 per year. Landownersmust develop a management plan andmaintain the forestry usage for 10 years.In 2001, $4,100,000 was disbursed forcost sharing on 50,000 treated acres.Annual program funding varies withharvest levels and severance tax rates.

Mississippi cost-share program—The Mississippi Forest ResourceDevelopment Program was authorizedin 1974 in response to concerns aboutthe future availability of softwood

timber. The program is financedthrough 80 percent of timber severancetax collections and is administered bythe Mississippi Forestry Commission.Assistance is available on a first-come, first-served basis to NIPFand non-Federal public landowners.No minimum ownership acreageor treatment area is stipulated.Landowners are required to submita management prescription forthe desired treatment area, complywith commission standards duringoperations, and maintain practicesfor 10 years.

The cost-share rate is 50 percentfor tree planting, site preparation,prescribed burning, firebreakconstruction, and timber standimprovement. The rate is 75 percentfor direct-seeding and mixed-standregeneration. Payments are limited to atotal of $5,000 per landowner per year.

Disbursements for cost-sharepayments have increased from$1,829,608 in 1994 to about $3million in 2000. Funding levels arevariable from year to year, dependingon timber harvest revenues. Annualtreatments increased from about39,000 acres in 1994 to more than63,500 acres in 2000.

North Carolina cost-shareprogram—The North CarolinaForest Development Program wasimplemented in 1978 to increaseproductivity of private forests in theState while protecting soil, air, andwater resources. The program isavailable to industrial (including forestindustries) as well as nonindustrialowners. Funding is provided througha combination of State general fundsof $700,000 per year and revenues ofabout $1.5 million annually from a taxassessed on primary forest products.

A forest management plan withprovisions for assuring forestproductivity and environmentalprotection must be approved by thedivision of forest resources. Approvedpractices on a minimum of 1 acreinclude site preparation, silviculturalclearcutting, tree planting or seeding,and release treatments to ensurethe survival of the stand.

The cost-share rate is 40 percentfor most practices. In 1993, however,a rate of 60 percent was offered forplanting hardwoods and longleaf pineand for planting wetland species such

as baldcypress and Atlantic white-cedar.There has been substantial interestand response to the incentive toplant longleaf pine.

Program eligibility limitations are:(1) landowners are restricted to amaximum of 100 acres each year,(2) projects must be initiated within1 year and completed within 2 yearsafter funding approval, and (3)practices must be maintained for10 years as prescribed in the approvedmanagement plan. In addition, projectsnot conducted in accordance withState BMPs may not be fundedand may be subject to penaltiesunder the State’s Sedimentationand Pollution Control Law.

Program accomplishments includeassistance to 22,666 landownersfor tree planting on more than766,000 acres between 1978and 1999. In 2000, about 2,000landowners received assistance fortreatments on 52,000 acres. Some38,441 acres were treated in 1994.

The North Carolina AgriculturalCost-Share Program for Non-PointSource Pollution Control wasestablished in 1985 to encourageconservation practices, includingtree planting, on erodible soils wherewater quality is being impaired. Theprogram is administered by the NorthCarolina Department of Environment,Health, and Natural Resources, Divisionof Soil and Water Conservation, andis funded through State generalappropriations. The cost-share ratefor tree planting is 75 percent ofthe average cost of establishingfescue up to a maximum of $15,000per year. In 1999, 646 acres wereplanted in trees under the program.

A temporary program, the FranReforestation and RehabilitationProgram, was established in 1997to assist private landowners withreforestation and stand rehabilitationfrom damages resulting from HurricaneFran (September 1996). An allocationof $4,100,000 from the Governor’sDisaster Relief Reserve funded theprogram. Cost-share rates rangedfrom 40 to 60 percent of the costof stand establishment andimprovement practices.

South Carolina cost-shareprogram—The South Carolina ForestRenewal Act was enacted in 1981 toprovide incentive payments to private


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landowners to increase the productivityof their forest land and to ensure acontinuing and adequate flow of woodproducts in the State. At that time,some 2 million acres of poorly stockedor idle nonindustrial private land werein need of reforestation (Izlar 1983).

The act directs the South CarolinaForestry Commission to administerthe program and to ensure that forestoperations are conducted in a mannerthat protects the State’s soil, air,and water resources.

The program is funded through acombination of State appropriations(20 percent) and a severance tax (80percent) on primary forest products.From the program’s inception in 1981through 1995, the General Assemblyappropriated $100,000 annually, andthe forest industry tax provided fourtimes that amount for a total outlay of$500,000 per year. However, in 1996,the General Assembly increased itsappropriation to $200,000, and theindustry severance tax provided$800,000 for a total outlay of $1million per year. Funding in the futureis expected to remain at this level.

All private nonindustrial land capableof producing at least 50 cubic feet ofindustrial wood per acre per year iseligible for cost-share assistance. Theprogram requires a minimum treatmentarea of 10 acres for mechanical sitepreparation; otherwise, there are nominimum acreage limitations. A forestmanagement plan must be approvedby the forestry commission, and theproject area must be maintained in aforest condition for at least 10 years.

Approved practices include naturaland artificial regeneration, timberstand improvement, and prescribedburning. The average cost-share rateis 40 percent, with reimbursementslimited to the amount needed tocomplete the project on 100 acres.For artificial regeneration, the programrequires that all merchantable timberbe removed before applications areaccepted. Disbursements of $657,438were made to landowners in 1999 forpractices on 6,494 acres. The totals in1994 were $515,736 for treatments on5,904 acres.

Tennessee cost-share program—The Tennessee Reforestation IncentivesProgram was initiated in 1997 toprovide financial assistance tolandowners for planting trees on

marginal and highly erodible croplandand pastureland. Cost-share paymentsare available to plant pine trees andcontrol competing vegetation. TheTennessee Division of Forestryadministers the program. Funding isprovided by the State AgriculturalResources Conservation fund, whichwas established with a portion ofTennessee’s real estate transfer taxreceipts. The cost-share rate is 50percent of costs. Since 1997, totalcost-share payments have rangedfrom $140,000 to $180,000 peryear for treatments on 2,000 to 3,000acres. Annual payments are limitedto $5,000 per landowner per year.

The Agricultural ResourcesConservation Program, which priorto 1998 was known as the AgriculturalNonpoint Source Pollution Program,was initiated in 1993. It providescost-share assistance for soil andwater improvement and riparianzone protection practices on privateagricultural land, including non-industrial forest land. Costs are sharedfor forestry practices, includingapplication of BMPs on harvested sitesand bottomland hardwood plantings.The program was administered bythe State Department of Agriculturethrough the county soil conservationdistricts until 1998, when admin-istration was transferred to the divisionof forestry. Technical support forforestry projects is also providedby the Tennessee Division of Forestry.

The program was initially fundedin part by a 3-year grant from the U.S.Environmental Protection Agency(EPA). Continued funding has beenfrom the State Agricultural ResourcesConservation fund, which wasestablished with a portion ofTennessee’s real estate transfer taxreceipts. Funding levels vary withfluctuations in the real estate market.

Annual cost-share payments rangefrom $14,000 to $20,000 per year forforestry projects. A stewardship plan,modeled after the Federal stewardshipprogram plan, is required. The cost-share rate is 75 percent for BMPapplication and riparian zoneprotection and 50 percent forbottomland hardwood plantings.Annual cost-share payments arelimited to $5,000 per landowner.

Texas cost-share program—The Texas Reforestation FoundationProgram was chartered and funded in

1981 by forest products companies inan effort to increase the productivityof private nonindustrial woodlands andthereby ensure future timber supplies.The program is administered by theTexas Forestry Association. Technicalassistance is provided by the TexasForest Service. To apply for funds,a landowner must submit a forestmanagement plan for projects locatedin the commercial forestry regionof east Texas. The cost-share rateis 50 percent for land clearing, sitepreparation, tree planting, and releasetreatments on 10 or more acres.Applicants are prioritized accordingto tract size, previous cover, and siteindex; higher ranking is assigned forsmall ownerships, cutover land, andproperties with high site indices.The program requires practices tobe maintained for 10 years.

All major forest products companies,as well as several smaller companies,provide financial support through avoluntary assessment on primary forestproducts. Funding is relatively stableat about $400,000 per year. Cost-sharedisbursements were $350,000 in 2000for reforestation on about 7,000 acres.In 1994, cost-share payments of$280,839 were made for reforestationand timber stand improvement on6,096 acres. Funding has not beensufficient to meet landowners’demands; in most years over $1million is requested for projects.

Virginia cost-share program—The Virginia Reforestation ofTimberlands Act was established in1970 to maintain a viable pine industryin light of 1966 USDA Forest Serviceforest inventory statistics indicatingsoftwood removals exceeding growth by15 percent (Marcum 1993). Theprogram is administered by the VirginiaDepartment of Forestry and is financedthrough an assessment on primaryforest products and matching Statefunds. Funding from the industry taxwas $800,000 initially, increased toabout $1 million in 1994, and was$1,274,000 in 2000. Matching Statefunds have not been fully appropriatedin all years due to budgetaryconstraints, but in 2000, State generalfunds of $1,313,574 were appropriated.

All private landowners, includingindustrial forest landowners, are eligiblefor the program. Reimbursements areavailable for 40 percent of the cost ofsite preparation, tree planting, andbrush control in pine stands up to a


maximum of $75 per acre. However,land requiring reforestation under theState seed tree law is not eligible forthis program, except where more than75 percent of the stand is infested bythe southern pine bark beetle. Theminimum project size is 5 acres,unless planting is done withoutsite preparation, in which case theminimum is 1 acre. The maximumproject size is 500 acres. The programrequires the use of BMPs within projectboundaries and a 10-year commitmentto maintain practices.

In 1994, disbursements of$1,014,331 in cost-share paymentswere made for reforestation and timberstand improvement on 40,393 acres.In 2000, payments more thandoubled to $2,253,546 for practiceson 75,900 acres. Funding is expectedto remain stable.

The Virginia Agricultural BestManagement Practices Cost-ShareProgram was established in 1984 aspart of a multi-State effort to protectwater quality in the Chesapeake Baywatershed. The development of astewardship plan and compliancewith BMPs are encouraged, but notmandatory. The program offers a $150-per-acre payment for tree planting onerodible cropland or pastureland inaddition to cost-share payments fromother programs. Cost-share assistanceis also available for stabilizing aban-doned logging roads and plantingstreamside buffer strips. The programis administered by the soil and waterconservation districts. Funding forthe program includes Federal outlays,State revenues, and contributionsfrom private organizations, such asthe Alliance for the Chesapeake Bay.Funding for forestry practices hasbeen around $50,000 annually.

Discussion and ConclusionsSoftwood harvest on NIPF land is

projected to increase from 5.2 billioncubic feet in 1997 to 7.2 billion cubicfeet by 2050 in response to reducedharvests on national forest and otherFederal land (Haynes, in press). Mostof the increase in supply is projectedto come from pine plantations inthe South. If these plantations arenot established, timber availabilitycould be a problem in some areas.

The long-term nature of forestryinvestments, coupled with the up-

front capital required to establishregeneration and perceived low ratesof return, are major disincentives tosome NIPF landowners. Cost-sharepayments partially offset landowners’initial costs for site preparation, treeplanting, and forest stand improvementand increase profits at harvest.

Most State cost-share assistanceprograms are patterned after theFederal FIP, ACP, or SIP. However,specific program features vary greatlyamong the States.

Program funding is generally fromState revenues, most commonly fromtimber harvest taxes and general Stateappropriations (table 8.3). A varietyof private sources has contributed tofunding of several States’ programs.The Texas cost-share program isunique in that it is funded entirelyby a voluntary, self-assessed tax onforest industry firms. The VirginiaAgricultural Best Management PracticesCost-Share Program is funded inpart by contributions from a privateorganization, the Alliance for theChesapeake Bay.

Definitions of eligibility vary amongthe States but generally include oneor more of the following criteria:(1) minimum or maximum ownershipor project size limitations, (2) siteproductivity ranking, and (3) priorityranking of projects according to Stateresource goals (table 8.2). All programsfocus primarily on NIPF land, butother ownerships are eligible insome States. Corporate and industrialforests are eligible for cost sharing inNorth Carolina, South Carolina, andVirginia. The South Carolina programspecifically excludes wood-processingindustries; in contrast, the NorthCarolina and Virginia programs includeforest industries as eligible ownerships.Non-Federal public land is also eligiblein Alabama and Mississippi.

Eligible forestry practices generallyinclude tree planting, site preparationfor natural and artificial regeneration,timber stand improvements, and pre-scribed burning. Other activities thatmay be eligible include managementplan development, soil and water-quality protection practices, and fishand wildlife habitat improvement.

Maximum cost-share payment ratesin 2000 ranged from 40 percent inNorth Carolina and Virginia to 75percent for direct-seeding and mixed

stand regeneration in Mississippi. Mostcommonly, rates are 50 to 60 percent.All State programs require landownersto develop a management plan andrequire that practices be retained for10 years (table 8.2). None of theSouthern State programs permitlandowners to receive concurrentFederal and State cost-shareassistance for the same project.

The tax treatment of cost-sharepayments has been favorable forlandowners. Under Section 126 ofthe IRC, all or a part of cost-sharepayments for reforestation and someother practices may be excludablefrom the landowner’s taxable income(Hoover 1989).

Cost-share payments from Federalprograms that have been approvedfor exclusion for Federal income taxpurposes include FIP, SIP, WRP, EQIP,and WHIP. To date, CRP cost-sharepayments have not been ruledexcludable. Cost-share paymentsfrom the following State programs havebeen approved for exclusion: (1) theLouisiana Forest Productivity Program,(2) the Mississippi Forest ResourceProgram, (3) the North Carolina ForestDevelopment Program, (4) the SouthCarolina Forest Renewal Act Program,and (5) the Virginia Reforestation ofTimberlands Act Program.

The Southwide accomplishmentsof State cost-share assistance programsfor tree planting and timber standimprovement were about 140,000 acresin 1994. In 2000, treatments nearlydoubled to 278,000 acres. In 1993, theleading State programs were in Virginia,Mississippi, and North Carolina where40,393, 39,254, and 38,441 acres,respectively, were treated. Projectsin these three States represented about90 percent of the acreage treated inthe South and about 83 percent of theacreage treated nationwide with Statecost-share funding (Haines 1995).

In 2000, the leading State programswere again in Virginia, Mississippi,and North Carolina, in addition tothe newly implemented programin Louisiana. Treated acres were75,900, 63,588, 52,000, and 50,000,respectively. These totals representabout 87 percent of the 278,000acres of cost-share accomplishmentsacross the South in 2000 (table 8.3).

Assistance for forest land manage-ment that does not include timberproduction as a primary goal has


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expanded greatly over the past 15years. Awareness of the importanceof nontimber forest resources,especially water quality and wetlands,has increased markedly. In the South,State cost-share programs for soiland water conservation and riparianzone protection have been estab-lished in Kentucky, North Carolina,Tennessee, and Virginia.

The efficiency of cost-share programsmight possibly be improved bylowering cost-share rates, particularlyin times of increasing stumpage prices.In this way, more owners and moreacres might be covered with thesame expenditures. In addition,discontinuing some Federal programsand redirecting Federal dollars to Statecost-share programs could decreaseadministrative costs. In 1996, Federalfunding of $750,000 was appropriatedto the Texas cost-share program.

In addition to cost-share programs,potential policy mechanisms to improveforest productivity and expand theforest land base include mandatoryreforestation regulations or a mixtureof incentive programs with regulatorymandates. For example, minimumreforestation standards might berequired on harvested sites, andcost-share payments might be offeredonly for tree planting on open land.Additional afforestation opportunitiesinclude tree planting to offsetenvironmental degradation such asthat from pollutants emitted by coal-fired plants or to sequester carbonfrom other sources (Moulton 1994).

State-level tax incentive programsto promote forestry have beenimplemented in some Southern States.Mississippi offers a State income taxcredit for reforestation costs. Oklahomaand Texas have exempted productsused for forestry purposes from salestax. Another incentive in Texas is theretention of the agricultural propertytax assessment for 15 years after treesare planted on former agriculturalland. Previously, the tax rate escalatedupon planting of seedlings.

In recent years, State tax incentiveprograms have been initiated spec-ifically to preserve, improve, andcreate wetlands and riparian zones.Reduced property tax assessmentsare available in Oklahoma for riparianbuffer strips and in Texas for riparianbuffer strips and endangered specieshabitat. State income tax credits are

offered in Arkansas for the costs ofestablishing and maintaining wetlandsand riparian zones. In Virginia, a taxcredit is available for 25 percent ofthe value of the timber retained inriparian buffers, up to $17,500.

Future Research NeedsComprehensive analysis of the

various cost-share, tax incentive,and technical assistance programs isneeded to determine the most effectivepolicy options in terms of forestryinvestments, individual landowners’goals, forest sustainability, and futurebenefits for society overall.

Finally, there is a need to comparethe cumulative effects of an individualState’s institutional mechanisms:tax policies, cost-share programs,and regulatory programs onforestry investments and forestresource protection.

AcknowledgmentsThe authors thank the administrators

of the State cost-share programs forresponding to our questionnaire andanswering our many questions; theircooperation facilitated this study.

Current-Use PropertyValuation

IntroductionCurrent-use property tax laws provide

that properties be assessed and taxedbased on their productivity or income-producing potential in their currentuse, if that use is considered sociallydesirable. Forestry and agricultureare such uses. Current-use laws wereenacted in response to criticismsof the traditional ad valorem tax. All13 Southern States have use-valuelaws that include forests among theclasses of land eligible for current-useassessment. Nationwide, 42 States have47 use-value laws that include forestsamong the eligible land classes.

Under these laws, land is assessedand taxed solely on the basis of itsincome-producing potential whenused for forestry purposes. In practice,however, significant differences existamong the statutes as to how forestland use values are to be determined.This section briefly reviews the use-value laws applicable to forest land inthe South, examines the differences in

procedures to determine assessed value,and looks at the impacts of such laws.

MethodsWhen the United States was founded,

the States retained the right to establishtheir own property tax systems. Thus,considerable variation exists amongState systems for taxing forest property.The USDA Forest Service sponsoredseveral reviews of State forest landand timber tax laws (Carlen 1976;Nelson 1941; Williams 1956, 1967).These studies mostly examined theexistence and depth of coverage ofState assessment guides for forest landand timber. The Timber Tax Journalprovided a yearly update of forestryproperty tax laws until it ceasedpublication in 1984. Hickman (1982,1983) summarized State current-use property tax laws in severalpublications. The summaries wereupdated in 1993 (Doherty 1993).At that time, the State statute bookswere searched to identify States withuse-value laws that include forestsamong the classes of land eligiblefor current-use assessment. Propertytax officials in each of these Stateswere contacted and asked to provideadministrative rules and regulations,assessment guides, and other relevantpublished materials that supplementand clarify the statutory provisions.The statutes and the informationobtained were used to summarizeprocedures for each State. Thesummaries were then returned to theproperty tax officials in each State sothat the accuracy of the informationcontained therein could be verified.

For this Assessment the summarieswere again updated by searchingfor changes in the statutes and byusing the State property tax summariesavailable on the National TimberTax Web site (Department of Forestryand Natural Resources, PurdueUniversity 2001). The updatedsummaries were used to identify andcategorize restrictions, requirements,and alternative procedures.

ResultsReasons for enactment—Assessment

and taxation of forests on the basis ofuse value emerged in the 1960s as away of slowing the conversion of ruralland to more intensive uses, such asindustrialization, first- and second-home construction, and recreationdevelopment. Forest landowners were


often forced to develop their landbecause its market value commonlyexceeded values based upon currentincome-producing ability. Use-valuelaws were seen as a way of restoringthe balance between a property’staxable value and its income-producingpotential. Hickman (1982) reportedthat use-value laws were seen asachieving two closely related goals:

1. Owners of forest, farm, and otherrural land who wanted to profitablykeep their properties in their traditionaluses could do so; and

2. The State and its citizens would reapthe benefits derived from the continuedmanagement of the rural land base.

Between 1950 and 1970, conversionof forest land was a serious problemin certain parts of the United States.Modest losses were experienced in theSouth, but the total acreage remainedessentially unchanged. Losses ofprivately owned farmland weremuch more pervasive and substantial,however, declining 14 percent (Wall1981). Such losses were of greatconcern for two reasons: (1) losses todevelopment are essentially irreversible;and (2) a multitude of economic, social,and environmental benefits are derivedfrom rural uses. Examples of thesebenefits include: (1) greater assuranceof sufficient food and fiber to meetfuture needs; (2) the economic activitygenerated by viable agricultural andforest industries; (3) increased outdoorrecreation opportunities for urban andsuburban residents; (4) protection, orperhaps even improvement, of air andwater quality; and (5) a slowing ofurban sprawl.

Key forestry provisions—Use-valuelaws are of three basic types: (1) purepreferential assessment, (2) deferredtaxation, and (3) restrictive agreements.Each provides for assessment andtaxation of qualified properties basedon current-use value as opposed tomarket value based on highest andbest use. The differences between thethree types stem from two things: (1)the restrictions placed on the abilityof participating property owners tochange land use, and (2) the provisionscontained for recouping the taxconcessions granted to participatingproperty owners when they converttheir properties to some ineligible use.

Under pure preferential assessment,land withdrawn from the program or

converted to an ineligible use issubsequently taxed on the basis of fairmarket value, but no declassificationpenalty is imposed. Under deferredtaxation, eligible land that is withdrawnfrom the program or converted toanother use not only is taxed at highestand best use but is subject to a penaltybased on the taxes saved during theperiod of classification. Finally, underrestrictive agreements, the ownersof eligible land contract with the Stateto restrict the use of their propertyfor a specified number of years. Inreturn, they are granted current-useassessment. During the period of thecontract, changes in land use areusually permitted only if they aredeemed to be in the public interest.When development is allowed, apenalty based on the taxes savedduring the period of classificationis generally imposed.

Five Southern States have purepreferential assessment statutes,seven have deferred taxation statutes,and one, Georgia, has a restrictiveagreement statute (table 8.4).

Three of the southern statutes aremandatory, and 10 are optional. InStates with mandatory laws, all forestland that is eligible for use-valueassessment must be assessed andtaxed on the basis of its worth forforestry purposes.

All use-value laws essentially havethe same structure. Their key pro-visions generally coincide with thelaw’s chief administrative steps. Theadministration of a use-value propertytax statute usually involves (1) settingthe conditions for eligibility; (2)evaluating applications (if necessary)for enrollment; (3) assigning a dollarvalue to the enrolled property; (4)overseeing continued enrollment,withdrawal, and related penalties; (5)providing a review or appeal processconcerning eligibility and assessment;and (6) collecting and distributing thetaxes. See Hickman (1982, 1983) andthe Gulf South Research Institute(1982) for more details.

Valuation methodology—The assetthat is to be assessed and taxed differsamong the statutes, and this differencehas some bearing on the selection ofa valuation method. In some States,both the land and timber thereon areconsidered taxable property underannual ad valorem taxation. In severalother States, however, the use-value

law is linked with an exemption statute,wherein standing timber is exemptfrom annual ad valorem propertytaxation but is usually taxed insteadat the time of harvest through a yieldtax or severance tax. Thus, care mustbe taken to ensure that the valuationmethodology is appropriate for theasset to be valued. Standing timberis statutorily exempt from annualproperty taxation in Alabama (Codeof Alabama, 40-7-25.1 to 40-8-1),Georgia (Code of Georgia Ann., 48-5-2,48-5-7.4, and 48-5-269), Louisiana(Louisiana Rev. Stat., 47:2301 to47:2309), Mississippi (MississippiCode, 27-35-49 to 27-35-50), NorthCarolina (North Carolina Gen. Stat.,105-277.2 to 105-277.7, 105-289,and 105-360), and Tennessee(Tennessee Code Ann., 67-5-1001to 67-5-1011). Virginia statutes donot exempt standing timber fromproperty taxation, but they tax thevalue of the bare land alone.

In most Southern States the chiefState administrative agency or advisorycommittee publishes schedules ofrecommended current-use values,which may be broken down by region,forest type, and productivity classacross the State. In these cases, thelocal (generally county) assessorsselect from the range of values providedin the tables, making adjustments, ifapplicable, using personal knowledge,judgment, experience, and otherinformation that may be available.In other States, however, the taxdepartment or an advisory committeedevelops procedures, usually detailedin an assessment guide, for countyassessors to use in valuing individualproperties. County assessors in theseStates use procedures and dataprovided by the chief administrativeagency and apply them to developassessed values for either individualproperties or productivity classesin their counties.

Kentucky (Kentucky Rev. Stat., Sec.132.450) is unique among SouthernStates in that it simply lists the factorsto be considered in determining usevalue and leaves it up to the assessorto determine their relevance. Thefactors to be considered include:(1) the income potential of principalcrops; (2) prices of comparable landacquired for agricultural purposes;(3) relative percentages of tillableland, pastureland, and woodland; (4)


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State and year

AL AR FL GA KY LA MS NC OK SC TN TX VAKey forestry provisions 78 81 59 91 70 76 80 73 74 75 76 79 71

Type of statute1. Pure preferential assessment X X X X X2. Deferred taxation X X X X X X X3. Restrictive agreements X

Scope of statute1. Mandatory X X X2. Optional X X X X X X X X X X

Restrictions on eligibility1. None, i.e., all forest land eligible X X X2. Minimum acreage X X X X X X X3. History of forest use X X4. Under approval/sound program of management X X5. Minimum annual gross forest income X6. Areas classified/zoned as forest land X X7. Timber available for harvesting X X8. Market value exceeds use value X9. Highest and best use is timber growing10. Other X X X X X

Application requirements1. None X X2. Initial application X X X X X X X X3. Annual applications or recommitments X X4. Enter contractual agreement5. Other X X

Determination of current use value1. Definition only2. Relevant factors listed X3. Agriculturally based valuation X X4. Income capitalization X X X X X X X X X X X X a. Schedule provided X X X X X X X X b. Timber exemption X X X X X X c. Bare land value approach X X d. Sustained yield approach X X X X X X X X X X5. Other X X

Declassification penalty1. None X X X X X2. Rollback tax X X X X X3. Rollback tax with interest X X X

Table 8.4—State and year use-value law enacted


soil productivity; (5) risk of flooding;(6) land improvements relating toproduction of income; (7) accessibilityto all-weather roads and markets; and(8) all other factors affecting the generalagricultural or horticultural economy—interest rates, product prices, inputcosts, etc.

The value of forest land hastraditionally been determined underone of three bases: (1) cost methodsfor restoring a forestry investment, (2)comparison of sales of similar forestedproperties, and (3) capitalization ofexpected timber income (Williamsand Canham 1972). The first of these—the use of historical, replacement,or restoration costs—is of limited valuein determining the current-use value offorest land. First, past costs may be outof line with current costs because ofappreciation or depreciation, present orprospective changes in use, or costs thatwere out of line to begin with. Second,immediate replacement or restorationis physically impossible because of thetime element necessary to grow anotherstand. Timber cannot be directlyreplaced, and it is impossible to replacean uneven-aged stand (Williams andCanham 1972). Only Florida’s law liststhe cost-replacement approach as oneof the choices, along with the marketand income capitalization approaches,that the assessor may choose in valuingforest land (Rules of the FloridaDepartment of Revenue, Division ofAd Valorem Tax, Chapter 12D-51.01).However, the statute recommends theincome-capitalization approach, statingthat the cost-replacement approach isnot suited for measuring the abilityof land to generate income fromthe growing of timber.

The second possible basis for valuingforest land is a market analysis of salesprices of similar forested properties.The advantage in using market value isthat it integrates all the relevant factorscomprising value. The market analysisapproach is much more commonlyused if highest and best use is thevaluation criterion. With current usefor growing timber as the criterion,however, the sales transactions in theanalysis must be properties in whichtimber management is the highest andbest use or for which the land is limitedto timber management use. Problemsarise in using this approach when analternative use of a property, such asa motel site, significantly alters its

value. Another difficulty in using thisapproach is that no two propertiesare exactly alike, and it is difficult tofind enough transactions involvingsimilar properties.

While none of the statutes base usevalue solely on a comparison of sales ofcomparable properties, several use thismethodology at least in part. The use-value statutes of Kentucky (KentuckyRev. Stat., Sec. 132.450) and Tennessee(Tennessee Code Ann., 67-5-1008) listthe prices of comparable land acquiredfor agricultural or forestry purposesas one of the relevant factors to beconsidered in determining use value.Florida includes market sales analysisamong the three different approachesthat assessors may choose from inestimating use value. The GeorgiaState Revenue Commissioner basesthe annual recommended use-valueschedule on a weighted combinationof sales data and capitalized net income(Georgia Code Ann., 48-5-269). Salesdata for comparable real property withand for the same existing use represent35 percent of the weighted value. InSouth Carolina, an index of the averagevalue per acre of farm real estate landand buildings is used to construct amultiplier to adjust the base-year fairmarket value for land used to growtimber. The multiplier is determinedusing an income capitalization method(South Carolina Code, 12-43-220).Outside the South several Statesuse stumpage prices as well asland sales data as part of a hybridapproach, often in combinationwith income capitalization.

The final and most widely used basisfor determining forest-use value is thecapitalization of expected income fromthe land. In States where forestry isa major land use, expected income issynonymous with the expected futureearnings from timber management.Under this approach, forest-use valueis equal to the discounted net presentvalue of the stream of anticipated futureincome accruing to the land fromtimber production.

Some States consider value fromnontimber uses in their formulas forcapitalizing expected income. Florida’sstatute allows for income from navalstores and range pasture usage to beconsidered along with timber income(Rules of the Florida Department ofRevenue, Division of Ad ValoremTax, Chapter 12D-51.01). In Texas,

land on which timber harvestingis restricted to meet aesthetic,conservation, water protection, orplant or animal pro-tection goals mayqualify for appraisal as restricted-usetimberland (Sec. 23.9801, Tax Code).Land in an aesthetic managementzone, critical wildlife habitat zone,or streamside management zoneis appraised at one-half of whatit would have been appraised atunder normal circumstances.

A variant of the income capitalizationapproach allows rental rates for landused for timber production to be usedas a proxy for anticipated future timberincome. Annual net cash rental isusually determined through an analysisof typical rental agreements collectedover the years prior to the yearfor which the valuation is beingdetermined. Comparable land mustbe used for forestry purposes andlocated in the vicinity, if practicable,of the property being valued. AmongSouthern States, only Oklahomacapitalizes timber income based onrents from land dedicated to that use.

Two main variants of incomecapitalization are: (1) the bare-land-value approach, and (2) thesustained-yield approach. Under thebare-land-value approach, a stand isassumed to be established on cutoverland, grown to maturity, harvested,and the process repeated interminably.Bare-land value, also known as land-expectation value, is equal to thepresent net worth of an infinite seriesof periodic incomes. Forest land isregarded as the sole productive agentand timber as working capital. Underthis approach, bare land is the basicasset to be valued, with standing timberexempted from taxation (Hickman1989). Among the Southern States,only North Carolina and Virginiause the bare-land-value approach.

The sustained-yield approach involvescapitalizing the net value of the meanannual growth increment, as if itoccurred as an annual income, givenan assumed rotation length. A fullyregulated forest is assumed to existin which an equal income is producedin the current and all subsequent years.Timber is regarded as fixed capitalbecause it has to be in place to producesuch an income pattern. The “factory”in which timber is produced consistsof both land and trees (Hickman1989, Williams and Canham 1972).


SOCIAL

Thus, when this approach is used todetermine forest-use value, timber aswell as the land is taxed. This approachis used by the other 10 Southern Statesthat use income capitalization. SeveralStates that exempt timber from taxationnonetheless use the sustained-yieldmethod. Despite this policyinconsistency, there is no evidencethat property taxes are any higherin these States as a result.

A number of statutes haveprovisions that provide a floor orceiling on assessed value. In Georgia,for example, the current-use value ofany conservation-use property maynot increase or decrease by more than4 percent from its value for the previoustaxable year or increase or decreaseduring a covenant period by more than25 percent from the first year of thecovenant period (Georgia Code Ann.,48-5-269). Similarly, Mississippi doesnot allow the variation in use value,up or down, from a previous year toexceed 10 percent (Mississippi Code,27-35-49 to 27-35-50). Alabama’sstatute provides that assessed valuemay not be less than that levied inthe first tax year for which values arecomputed, and may not be greaterthan the assessed value in the first taxyear plus amounts equal to 3 percent ofsuch values multiplied by the numberof tax years elapsed since the first taxyear (Code of Alabama, 40-7-25).

Impacts—The intent of use-valueassessment of forest and other ruralland is to provide property tax reliefto participating landowners so thattheir land may continue to contributesocially desired benefits, which includefood and fiber for future economicactivity, open space at the urban fringe,and the slowing of urban sprawl. WhileStates may adopt use-value assessmentfor any or all of these reasons, thereare impacts that follow from thispolicy decision. As in Hickman (1983),the discussion here focuses on threemain areas: (1) equity implications,(2) revenue implications, and(3) effectiveness.

■ Equity—Use valuation causesthe taxes of participating propertyowners to decrease. Local governmenttaxing bodies normally respond tothe resulting decrease in the tax baseby increasing tax (millage) rates. Thetaxes of nonparticipating owners rise,and they collectively share a greaterproportion of the total tax burden.

The magnitude of the tax shift dependson the amount by which use valuereduces the assessment of participatingproperties and the percentage of thetotal base that is in participatingproperty. The amount of taxesshifted increases as participationrises. At a certain point, the numberof participating properties outstripsthe ability of the remaining non-participating owners to absorbthe tax shift.

■ Revenue—If local governmentsdo not have the flexibility to increasetax rates due to legislation or politicalpressures, the decline in the valueof the tax base due to use-valueassessment can have important revenueimplications. Local governmentsdepend heavily on property taxesto fund schools and provide publicservices. Any portion of lost revenuesnot offset by an increase in the taxrate is a cost of the program.

The revenue and equity implicationsoften receive the most scrutiny whenuse-value programs are implemented.Concerns are high where theenrollment rates continue to growand the tax base continues to erode(Newman 2000). When Georgiafirst implemented its current-usevaluation program in 1992, therewas considerable concern over theerosion of the tax base. A fewcounties lost almost 20 percentof their taxable base (Whitt 1992).The problem was exacerbated becauseGeorgia constitutionally removedstanding timber from property taxationin 1990 and replaced it with a yieldtax that taxed timber only when itwas cut. In this case, the tax-shiftingimpacts were particularly large, butthe benefits also were substantial.

■ Effectiveness—A search of theliterature reveals a general agreementthat use valuation provides substantialtax relief to participating owners. Mostresearchers, however, believe that thisrelief, by itself, does not retain forestand other rural land in traditional uses(Anderson 1993, Coughlin and others1978, Ferguson and Spinelli 1998,Gloudemans 1974). It appears that use-value taxation may, at best, delay butnot prevent development of rural land.The most often cited reason is thatproperty owners may be unable to resistthe large capital gains associated withdevelopment. It also is believed thatthe present value of the tax savings

may be capitalized into higher landprices by raising the reservation pricesof a significant number of landowners(Gottfried and others 1999). While usevaluation plays a role in changing therelative profitability of land uses, landuse change is thought to be driven by abroad range of other factors: populationand migration changes, socioeconomiccharacteristics of landowners, andtransitional factors.

Discussion and ConclusionsLoss of forest land continues to be a

serious problem despite the enactmentof use-value laws. The latest data showthat 2.63 million acres of southernforest were developed between 1992and 1997. This area represents 48percent of all land developed over thatperiod (fig. 8.2). Texas, Georgia, andFlorida led the Nation in the amount ofland developed during this period (U.S.Department of Agriculture, NaturalResources Conservation Service 1997).Population growth and migration drivemuch of this development. Amongthe economic, demographic, andsocioeconomic factors that influenceland use change (Alig and others 1998),use-value assessment, by itself, mayhave only a minor impact. The impactdepends largely on the degree ofdevelopment pressure that exists in agiven county. In mostly rural counties,use-value assessment probably has littleimpact because there is little differencebetween use value and market value.By comparison, in counties with rapiddevelopment, the difference betweenmarket and use value may be so largethat most landowners choose to selltheir land or convert it to a higher valueuse. In such areas, owners must wantto keep practicing forestry; that is, theymust receive intangible benefits fromkeeping land in forest. Gottfried andothers (1999) call this the “reservationpremium,” the monetized presentvalue of the intangible benefits. Asthe present value of the income fromforestry uses plus the reservationpremium exceeds the market value,the probability of conversion decreases.

Much of the land enrolled under Stateuse-value programs is far from majormetropolitan areas. This land faces littleor no development pressure. Thereshould be little difference between usevalue and fair market value for theseproperties. The two may be differentbecause States often use differentprocedures in determining market


3%

22% 26%

13% 36%

32%

9%36%

3%20%

30%19%3%

48%

2%32%

46%

20%

21%

2%19%

58%

19%16%

63%

2%

73%

13%10%

4%

69%19%

10%

3%

63%

14%

3%

20%

14%19%2%

64%43%

25%

28%4%

46%

31%21%

5%

Developed landOther3%

Forest46%

Range10%

Pasture21%

Cropland18% 41%

25%

16%14%

4%

value as opposed to use value. Thereare at least two examples where theenactment of use-value laws resultedin enrolled forested properties havinghigher use valuations than comparableproperties assigned fair market values.This situation was a result of selectcounties underestimating fair marketvalues (Hickman and Gayer 1983,Krietemeyer and others 1987). Themuch more common circumstanceis where the use valuation results inan assessed value below fair marketvalue. Researchers (Brockett and others1999) studying Tennessee’s Greenbeltuse-value statute found that it “. . .largely functioned as a windfall forparticipating landowners [in areasremoved from development pressures]without a commensurate return forthe rest of the area’s citizens.” Themixed objectives of the different Statecurrent-use laws make it difficult togauge whether the benefits receivedjustify the costs of these programs.Some statutes have stringent eligibilityrequirements that preclude all but landunder active forest management. States

with these statutes may consider thebenefits flowing from actively managedforest lands as commensurate with thecosts to nonparticipating landowners.

Many serious questions have beenraised about the suitability of use-valuelegislation for retaining forest and otherrural lands. In fact, some areasexperiencing high rates of growth haveseen no benefit from use-valueprograms. In Virginia, some countieshave given up on tools for slowingconversion and want to assess impactfees on developed land to pay for theinfrastructure and services needed toaccommodate the growth (Fergusonand Spinelli 1998). States will likelykeep use-value statutes, perhaps insome modified form, for two mainreasons (Hickman 1983): (1) thedesire to keep forest, farm, and otheropen space land from converting todeveloped uses is at least as strongtoday as it was when these laws wereenacted; and (2) the alternatives to usevaluation—rural zoning, transferabledevelopment rights, public fee simple

land purchases—have their owndisadvantages, some more seriousthan those of use valuation.

States may look at modifications toimprove the efficacy of their use-valuestatutes. Hickman (1982) made severalrecommendations that are still validtoday. One of these concerns the needfor stringent declassification penalties.The rollback tax should recoup alltax savings plus interest for the entireperiod that a property receives usevaluation. Hickman’s principalreasoning is that it promotes taxpayerequity. He argues that nonparticipatingproperty owners who fund the programshould recoup their costs when theintended benefits are not obtained.Moreover, statutes with higherdeclassification penalties woulddiscourage speculation and would bemore likely to attract landowners whoare serious about long-term forest use.

Needs for AdditionalResearch1. Changes in the relative profit-ability of land uses, resulting fromtax policies or otherwise, do notnecessarily translate into identicalFigure 8.2—Land uses converted to 5.5 million total acres of developed land, southern

region, 1992-97. The pie charts are proportional to the amount of land developed. Thesouthern region pie chart is not proportional to the State pie charts. Data values of 1percent or less are not shown. The developed land totals are as follows: cropland, 0.97million acres; pastureland, 1.18 million acres; rangeland, 0.52 million acres; forest land,2.63 million acres; and other, 0.19 million acres (U.S. Department of Agriculture, NaturalResources Conservation Service 1997).


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Table 8.5—Conservation easementson forest land granted to privateland trusts in Southern States, 1996

Total AverageState land area size

- - - - - - - Acres - - - - - -

AL 0 0

AR 0 0

FL 132,571 2,073

GA 0 0

KY 0 0

LA 0 0

MS 52,598 1,481

NC 64,973 1,407

OK 0 0

SC 1,492 105

TN 2,693 152

TX 4,913 86

VA 73,897 189

Total 333,137 —

changes in land use. Studies areneeded that look at the demographicand socioeconomic characteristics thatare associated with the decision toconvert forest or rural land to a moredeveloped use. Such a study might lookat how these characteristics are relatedto the owner’s reservation price.

2. Forest and rural land conversionshave been increasing in locations farfrom major metropolitan areas. Thenostalgia for small-town living, thedesire to live and work in beautifulsurroundings, and the new telecom-munications possibilities unleashedby the digital revolution have ledto boomlets in parts of the mountainwest, coastal Maine, and the Blue Ridgeand Smoky Mountains (Kotkin andSiegel 2000). Additional research maybe needed to assess the role and efficacyof use-value programs in this newwildland-urban interface.

Conservation Easements

IntroductionAn easement is a partial ownership

interest in a parcel of land, or theright to use the land for a specialpurpose. Conservation easements arelegally binding agreements betweenprivate landowners and nonprofit orgovernment agencies restricting futureactivities that can take place on a parcelof land. The purpose is usually topreserve the open character of the landby arresting or slowing development.

Conservation easements are becom-ing more popular for preserving orcontrolling land use by landownersand government. For landowners, aconservation easement is a voluntaryland use restriction, which offers ameans to reduce taxes while the landremains in its current use. On theother side, conservation easementsare one part of a larger spectrumof land use controls used by variouslevels of government. For the latter,conservation easements mayaccomplish land management goalswhen other land use controls areeither too expensive or unavailable.

The popularity of conservationeasements has grown since the1970s, when the IRC was amendedto allow charitable Federal income taxdeductions for qualifying conservationdonations, including conservation

easements (Bick and Haney 2001).However, the use of conservationeasements to protect productive forestland from development andfragmentation appears to be morerecent (Best and Wayburn 1996,Boelhower and Van Ryn 1996).

Methods and Data SourcesThe examination of conservation

easements was added to this chapterin response to public input. Timeconstraints precluded any new studybeyond a review of recent literature.Data were obtained from a 1996 surveyby Bick and others (1998) to estimatethe acreage of conservation easementson forest land held by private landtrusts in the South. Forest landeasement deed provisions in theSouth were summarized from Bickand Haney (1999).

ResultsForest land acreage—The survey

by Bick and others (1998) providedestimates of the growth and extentof conservation easements on forestland. The information was basedon a questionnaire mailed to allorganizations in the “1995 NationalDirectory of Conservation Land Trusts”that listed conservation easements as aland protection method. One questionrequested the number of conservationeasements and acreage on open spacesby land use types. The land use typesselected were farmland, forest land,wetlands, green space, rare sites,and other.

Nationally, forest was the largest singleland use among properties protectedwith conservation easements. Through1996, private land trusts had acquiredsome 5,600 conservation easements onforest land, encumbering almost 1.6million acres. A majorityof the acreage had been acquiredbetween 1991 and 1996. Conservationeasements on an additional 900,000acres of forest land were projectedfor purchase by existing land trustsby 2001.

About one-fifth of the total acreagewas in the South. Northeastern Stateswere among the leaders in terms ofthe number of reported forest landagreements, but Southern States wereamong the leaders in reported acreage,indicating a higher average protectedproperty size in the South.

Additional data for 13 SouthernStates were obtained from the surveydatabase (table 8.5). Four States—Florida, Virginia, North Carolina, andMississippi—accounted for 97 percentof the 333,000 acres in the South; smallamounts were also reported for Texas,Tennessee, and South Carolina. OtherStates did not have land trusts thatreported forest land easements at thetime of the survey. However, legislationwas enacted in Alabama in 1997 thatformally provided for conservationeasements on real property, and datafrom the 1998 National Land TrustCensus show land trusts have beenformed in all 13 Southern States exceptOklahoma (Land Trust Alliance 2000).

Deed content—As a part of thesurvey by Bick and others (1998),copies of conservation easement deedswere requested from land trusts for thedifferent types of land protection. Thecontent of the conservation easementdeeds received was analyzed anddivided into four distinct categories:affirmative rights, restrictions, reservedrights, and terms and conditions.Within each category, variables wereidentified and grouped to determinehow provisions affected timber,


development, and amenity values(Bick and others 1999).

The components of conservationeasement deeds—affirmative rights,restrictions, reserved rights, andterms and conditions—work in unisonto prevent, restrict, encourage, orguarantee certain uses of the forestand associated management practices.Affirmative rights express things thegrantee (land trust) is allowed to doon or with the protected property.Restrictions limit the activities of thegrantor (landowner) except for thoseallowed under reserved rights. Reservedrights are uses of the property retainedby the grantor. Terms and conditionsspell out the remaining details of theagreement, such as liability issues anddivision of property tax burdens.

A regional analysis provided insightinto conservation easement deedcontents as they related to forest valuesin the South (Bick and Haney 1999).For timber, restrictions tended toconstrain production through limitson timber harvesting methods andbans on certain forest managementpractices. Reserved rights pertaining totimber focused only on the harvestingof forest products, including timberand nontimber products such as pinestraw, Christmas trees, and fence posts.The only affirmative right of granteesassociated with timber was the rightto inspect properties for compliance.Overall, a lack of provisions pertainingto timber management and the type ofrestrictions found suggested that timbergrowing was not the primary use of theproperties on which the conservationeasements were granted.

For development, the most commonrestriction was one prohibiting allagricultural, industrial, commercial,and residential activities. However,landowners often reserve rights fortheir own use or the use of their heirs.Typically, these development rightsallow construction of a residence andassociated structures. As with timber,the only affirmative right associatedwith development was the right tomake compliance inspections onprotected properties.

Forest land has many potentialamenity uses compatible with theprotection of open space. The mostcommon amenity restrictions wererelated to recreational use, such asprohibitions against motorized vehicles

and hunting and fishing. Grantorscommonly reserved a broad rightfor low-impact recreational uses,which also often included huntingand fishing. New amenity uses arosefrom affirmative rights granted tothe land trust; these rights wereoften extended to the public, suchas recreational corridors providingaccess via hiking trails and waterways.

Discussion and ConclusionsConservation easements have

been publicized as a means of keepingland in its current use. Restrictions ondevelopment can preserve the currentuse feature, but new uses of openspace can result. Also, a scatteredor checkerboard pattern of protectionmay be a concern from a land usecontrol perspective. To be mosteffective in protecting open space andavoiding fragmentation, conservationeasements must be used in conjunctionwith other mechanisms that identifybroader areas for protection.

Allowing public access for amenityuses of private forest land is anexample of new land uses created byconservation easements. This changein the amenity potential of forest landcan alter its utility for current ownersand its value and appeal for futurebuyers. Private amenity enjoymentof the property is limited to activitiesreserved by the original grantor, withmany potential uses compatible withopen space foregone. The perpetualnature of most conservation easementsdictates the need for careful designto achieve acceptable agreements.

In easements on forest land beingmanaged for timber values, landownersmust be careful to reserve rightsessential to timber management. Inaddition to the right to harvest forestproducts, some provisions that may benecessary for southern forest land arerights to build temporary or permanentlogging roads and trails, reforest withtrees (including the use of improvedgenetic growing stock), restrict publicaccess (if any) during harvestingperiods and immediately afterreforestation, and use appropriatesilvicultural techniques such asprescribed fire, herbicides, andfertilization. Landowners makingan informed decision to ban timbermanagement activities should reservethe right to cut and remove timberdamaged by natural disasters.


The use of conservation easementson productive forest land appears tobe growing rapidly. Currently, thereare more than 1,200 private landtrusts in the United States that acceptconservation easements as donationson land; a smaller number purchaseconservation easements. In addition,many public agencies are seekingconservation easements as a meansof affecting land use. A morecomprehensive survey of all entitiesseeking conservation easementson forest land is needed to determinethe acreage, location, and possibleeffects on timber supplies and otherforest values.

Relatively little research has beendone on the content of forest landeasements, particularly those coveringproductive forest land. More analysis ofthe provisions of conservation easementdeeds is needed, as are assessments ofhow well conservation easements aremeeting the goals and objectives of theparties involved and the principles ofsustainable forest management.

AcknowledgmentsData for table 8.5 were compiled

and provided by Steven Bick, PrincipalConsultant, Northeast Forests, LLC,Thendara, NY.

Protective RegulatoryPolicies

IntroductionThis section of the Assessment

focuses on the protective regulatory(PR) policies that affect forestry in theSouth. Particular emphasis is placedon PR laws and policies protectingand enhancing water quality.

PR policies and laws safeguardsociety by limiting or mandatingcertain actions by the public andprivate sectors. They frequently relyon the “stick” of penalties rather thanthe “carrot” of subsidies or otherincentives to accomplish their objec-tives. Only in a few instances and inlimited jurisdictions do PR policiesand laws specifically regulate forestmanagement, but all forest land inthe South is affected by PR policy.The effects depend on: (1) executiveor jurisdictional level of the policy


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(Federal, State, or local); (2) forestland ownership category (Federal,State, industrial private, or NIPF);(3) owners’ management objectives(multiple use, timber/fiber production,or habitat conservation); and (4)location with respect to urban centers,water bodies, wetlands, and designatedcritical habitats for endangered species.

Federal PR statutes affecting forestmanagement in the South include:

■ The National EnvironmentalPolicy Act of 1969;

■ The Endangered Species Actof 1973;

■ The Federal Water PollutionControl Act of 1972 and subsequentamendments (Clean Water Act);

■ The Coastal Zone ActReauthorization Amendments (1990);

■ The Clean Air Act (1955) andsubsequent amendments;

■ The Federal Insecticide, Fungicide,and Rodenticide Act (1947) andsubsequent amendments;

■ The Organic Statutes of the USDAForest Service, and the U.S. Departmentof the Interior (USDI) Fish and WildlifeService and National Park Service;

■ The Multiple-Use Sustained-YieldAct of 1960 and the National ForestManagement Act of 1976;

■ The Federal Land Policy andManagement Act of 1976;

■ The National Wildlife RefugeSystem Administration Act of 1966;

■ The Wilderness Act (1964);

■ The National Historic PreservationAct (1966); and

■ The Administrative Procedure Act(1943) and subsequent amendments.

State PR laws and policies affectingforestry in the South include:

■ Statutes governing theadministration of State land;

■ State water-quality statutes;

■ State endangered species provisions;

■ State pesticide use and applicationguidelines;

■ State regulations for landdisturbance and erosion control;

■ Burning statutes; and

■ Seed tree, forest conservation,and BMPs for private forests.

Local PR ordinances (covered ingreater detail elsewhere in this chapter)

affecting forestry in the South fallprimarily in two main categories:

■ Roads (access by logging equipmentand weight limits), and

■ Tree protection (primarily inurban and urbanizing areas).

Methods and Data SourcesWhen lawyers say that they are

searching for the law on a particularsubject, they typically mean that theyare searching for enforceable provisionswithin the law. They are looking forthose aspects of the law that allow someprivate or public legal action, a meansof imposing fines or penalties todiscourage wrongdoing, or providea remedy for wrong already done.Accordingly, the primary sourcematerials consulted were the legalstatutes that establish PR policy.Secondary materials included booksand technical papers about forest policy.The most extensive original researchfor this section was performed bystudents at the Tulane UniversitySchool of Law and by the director ofthe Tulane Institute for EnvironmentalLaw and Policy.

Results—Federal LandFederal land in the South is owned

and managed by a variety of agencies,including the USDA Forest Service,the USDI Fish and Wildlife Service,the USDI National Park Service, theDepartment of Defense (branches of themilitary and the Corps of Engineers),the Department of Energy, the Bureauof Indian Affairs, and the TennesseeValley Authority. Despite the numberof agencies involved, only 9 percent ofthe forest land in the South is in Federalownership; nearly 6 percent of forestis managed by the USDA Forest Serviceand 3 percent by other Federal agencies(Powell and others 1994).

Of the Federal PR policies listed inthe introduction to this section, theAdministrative Procedure Act, theNational Environmental Policy Act,The National Historic PreservationAct, and the Endangered Species Actaffect each of the Federal agencies withland in the South. The AdministrativeProcedure Act governs agency conductin the processes of rulemaking andenforcement. In short, an agency’sactions cannot be substantivelyarbitrary, capricious, or procedurallyincompatible with its organic and other

management statutes. The NationalEnvironmental Policy Act chargesFederal Government agencies tocoordinate environmental protectionplans and programs, to incorporateamenity values in economic analyses,to involve the public, and, mostimportantly, to assess the impact ofFederal actions on the quality of theenvironment. The National HistoricPreservation Act requires that Federalagencies take into account the effects aproject will have on historic resourcesand allow the Advisory Council onHistoric Preservation the opportunityto comment on the effects of theproject. The Endangered Species Actrequires Federal agencies to (1) managetheir land to conserve endangered andthreatened species and (2) consult withthe Fish and Wildlife Service to ensurethat any agency action “. . . is not likelyto jeopardize the continued existenceof any endangered species or threatenedspecies or result in the destruction oradverse modification of habitat of suchspecies . . .” (16 U.S.C.S. § 1536).

In addition to the AdministrativeProcedure Act, the National Environ-mental Policy Act, the EndangeredSpecies Act, and the National HistoricPreservation Act, each agency hasmanagement regulations stipulatedby the Federal Code. These statutesdiffer, of course, depending on agencyobjectives. Regulations also differwidely in the amount of publicsolicitation required before significantactions are taken. With the exceptionof the National Environmental PolicyAct regulations of the Council onEnvironmental Quality (40 CFR §1506.6), most Federal agencies inthe South conduct their routine landmanagement programs with little inputfrom the public. The major exception,however, is the USDA Forest Service,which manages two-thirds of theFederal land in the South. A closerlook at its organic and managementstatutes is, therefore, warranted.

The Organic Act established thenational forests to “. . . improveand protect the forest within theboundaries, or for the purpose ofsecuring favorable conditions of waterflows, and to furnish a continuoussupply of timber for the use andnecessities of citizens of the UnitedStates . . . ” (16 U.S.C. § 475). Timberis allowed to be sold “For the purposeof preserving the living and growing


timber and promoting the youngergrowth on national forests . . . ”(16 U.S.C.A. § 476).

The Multiple-Use Sustained-Yield Actcodified management of national forestsfor a variety of attributes other thantimber and water. It states that: “. . .the National Forests are establishedand shall be administered for outdoorrecreation, range, timber, watershed,and wildlife and fish purposes . . .”(16 U.S.C. § 528). “‘Sustained yieldof the several products and services’means the achievement and main-tenance in perpetuity of a high-levelannual or regular periodic outputof the various renewable resources ofthe national forests without impairmentof the productivity of the land”(16 U.S.C. § 531).

The National Forest Management Actwas enacted in response to challengesover timber harvesting on nationalforest land. It has four key provisionsfor public oversight and managementplanning: (1) public participation in theplanning process, (2) rules governingthe preparation and revision of forestmanagement plans, (3) guidelines forclearcutting, and (4) economic analysisof management alternatives. A possiblefifth provision is the formal appealsprocess allowing members of the publicto challenge forest management actions.Shortly after the act was passed, acommittee of scientists was convenedto assist the agency with writing theplanning rules. This process wasrevisited in 1999 and 2000 by a secondcommittee of scientists. Subsequentlythe planning rules were revised to makeecological sustainability the overridingobjective for the management of thenational forests (36 CFR Parts 217 and219). Regardless of the objectives ofmanagement decisions, all activitiesmust adhere (when pertinent) to theClean Water Act, the Clean Air Act,and the Federal Insecticide, Fungicide,and Rodenticide Act as well as meetthe substantive and proceduralrequirements of the AdministrativeProcedure Act, the NationalEnvironmental Policy Act, theEndangered Species Act, the NationalHistoric Preservation Act, the OrganicAct, and the Multiple-Use Sustained-Yield Act.

The impact of Federal policies onFederal land has been the recovery offorests, wildlife, and water quality onthe vast majority of Federal properties

in the South. Recreation opportunitieshave increased. National forest andother Federal land has provided asupply of timber that, while increasingas a percentage of the overall amountallocated by the Federal Governmentnationwide, has declined in amountin the past decade. This recovery hasnot come without expense: meetingthe substantive and proceduralrequirements of the AdministrativeProcedure Act, the National Environ-mental Policy Act, the National ForestManagement Act, the Multiple-UseSustained-Yield Act, the EndangeredSpecies Act, and other PR statutesmakes the Forest Service, as well asother Federal agencies, a high-costproducer of timber and recreation.A final and unintended consequenceis conflict between forest managementand environmental protection statutesdue to the incremental passageof individual PR policies. Theseconflicts reduce efficiency and defermanagement action (Hill 1997).

Results—State and LocalGovernment Land

Collectively, the 13 Southern Statesown approximately 2 percent of theSouth’s timberland. Florida owns themost acres, followed by Tennessee,Arkansas, Mississippi, and NorthCarolina. This land is in State forests,State parks, State wildlife lands, andother special sites (historic, cultural,etc.). Less than 1 percent of the South’stimberland is in local and municipalownership (Powell and others 1994).

As with the Federal agencies,the various State agencies chargedwith managing the States’ forest landshave differing objectives expressedin their organic statutes. As a generalrule, State forestry agencies placeproportionately more emphasis ontimber management activities thando agencies administering wildlife,parks, and other areas. The amount ofpublic participation in agency activityvaries widely, depending upon agencyobjectives as well as the characteristicsof each State’s administrative procedurecode. Local and municipal managementvaries widely as well.

In addition to meeting the substan-tive and procedural requirements ofadministrative and organic codes,State land management agenciesand municipalities must meet the

requirements of Federal and Statewater-quality laws, Federal and Stateendangered species laws, and Federaland State air quality laws, as well asthe Federal Insecticide, Fungicide,and Rodenticide Act and any Stateequivalents, should managementactions necessitate compliance. Unlessthe State or local action is carried outwith Federal funding, assistance, orconcurrence, the provisions of theNational Environmental Policy Act andNational Historic Preservation Act donot apply. As with Federal land, theoverall impact of these protectiveregulatory policies has been therecovery of forest vegetation and manyof the game and nongame animalspecies on State land. State parks area very important source of outdoorrecreation, and State wildlife landprovides extensive areas for fishingand hunting. Local and municipalholdings offer important amenityuses (Cubbage and others 1993).

Results—Private LandApproximately 90 percent of the

South’s timberland is privately owned.Forest industry holds almost 20 percentof the total; NIPF owners control theremaining 70 percent (Powell andothers 1994). All owners are affectedto a greater or lesser extent by Federal,State, and local PR policies, dependingupon the location and environmentalcharacteristics of their property.

Federal StatutesThe substantive and procedural

Federal statutes (the NationalEnvironmental Policy Act, Admin-istrative Procedure Act, NationalHistoric Preservation Act, Multiple-Use Sustained-Yield Act, NationalForest Management Act, WildernessAct, etc.) do not apply to privateowners unless the private owner isreceiving Federal grants, assistance, orpermits. Environmental quality/publichealth laws (Clean Water Act; Clean AirAct; Federal Insecticide, Fungicide, andRodenticide Act; and Coastal Zone ActReauthorization Amendments) and theEndangered Species Act do apply. Otherstatutes such as Occupational Safetyand Health Administration workplaceregulations and the Superfund, whileimportant, have a relatively minorimpact on forest management activitiesand will not be discussed here. Also notdescribed in detail is the River and


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Harbors Act of 1899, which has thepotential to affect private forestryactivities that need a barge terminal.

Clean Water Act and Coastal ZoneAct Reauthorization Amendments—Two main types of water pollutionsources are recognized in the CleanWater Act: point sources, which havean identifiable input site such as adrainpipe; and nonpoint sources, whichdo not. Examples of the latter includefarms, forests, cities, and municipalities.Interpretation and enforcement ofstatutes pertaining to nonpoint-sourcepollution in the Clean Water Act andCoastal Zone Management Act havelargely been delegated to the Statesunder Sections 319 and 303(d) of theClean Water Act and underSection 6217 of Coastal Zone ActReauthorization Amendments. TheseState-administered sections will beaddressed in State implementation ofthe Clean Water Act and the CoastalZone Act Reauthorization Amendmentssection of this chapter.

The one facet of nonpoint-sourcewater pollution not delegated to theStates is Section 404 of the Clean WaterAct, which has been interpreted as amechanism to regulate activities injurisdictional wetlands in the UnitedStates. The Corps of Engineers (COE)has primary responsibility forenforcement of Section 404; theEPA has veto authority. The COE isauthorized to grant (or to deny)individual and general permits foractivities that may result in thedischarge of dredge or fill materialsinto the waters of the United States.Section 401 requires States to certifythat these permits comply with Statewater law. If the State deniescertification, the Federal permitmay not be issued. Selected activities(normal farming, silviculture, andranching) are exempted from thispermitting process under Section404(f)(1) provided that the activities arepart of established, ongoing operations.

Normal silvicultural activities aredefined as timber harvesting, minorplowing, seeding, draining, andcultivation for producing timber.Maintenance of structures and ditches,as well as road construction androad maintenance activities are alsoexempted from permitting. However,this permit exemption is conditionalupon the implementation of 15 FederalBMPs for maintaining and constructing

roads. Additionally, mechanical sitepreparation activities require a permitin nine types of wetlands as definedin a 1995 COE memorandum (Burns1996). Operators are exempted fromthe permit in other wetland typesprovided they utilize, as a minimum,the six BMPs for mechanical sitepreparation practices establishedin the memorandum.

Under 40 CFR 232.3(c)(1)(ii)(B),the scope of the forestry exemptionis limited and “[a]ctivities which bringan area into farming, silviculture,or ranching use are not part of anestablished operation.” In addition,“[a]n operation ceases to be establishedwhen the area in which it wasconducted has been converted toanother use or has lain idle so longthat modifications to the hydrologicalregime are necessary to resumeoperations.” The recapture provisionof Section 404(f)(2) further limits theexemption by requiring a permit forotherwise exempted activities thatconvert a wetland into a new use,where the flow and circulation of watersare impaired or the reach of watersreduced. “A conversion of section 404wetland to a non-wetland is a changein use of an area of waters of the UnitedStates” [40 CFR 232.3(b)]. Accordingly,Section 404 has the potential to affectboth industrial and NIPF owners offorested wetlands depending upon thescope of operation proposed for theirproperty as well as the intensity neededto accomplish management objectives.

Clean Air Act—The primaryobjective of the Clean Air Act is theprotection of human health by limitingrelease of airborne fine particulatematter and gases such as ozone andsulfur oxides. Some forestry activities,primarily burning and soil disturbancein close proximity to urban centers,can be affected by the human healthprovisions of the Clean Air Act.However, the act’s visibility standardsare more often pertinent to forestryoperations. While primarily utilized toprotect vistas near class I wildernessareas, these standards are mostfrequently applied in the South toprevent accidents by minimizing smokedrift from prescribed burnings overhighways. Landowners are liable forsmoke-related accidents, but a Statemay share the legal burden of anoperation that meets the conditions ofa State-issued burning permit. As with

the Clean Water Act and the CoastalZone Act Reauthorization Amendments,the implementation, monitoring, andenforcement responsibilities aredelegated to the States.

Federal Insecticide, Fungicide,and Rodenticide Act—Regulationsabout uses of herbicides, pesticides,and fertilizers influence some forestryoperations. The Federal Insecticide,Fungicide, and Rodenticide Actrequires that statutory restrictions, useprecautions, and instructions for properapplication and disposal specific toeach chemical be included on labels ofcontainers. The label also must indicateif application of the particular chemicalis limited to trained and certifiedapplicators. The EPA has regulatory andenforcement authority, although States,counties, municipalities, and other localjurisdictions may enact more stringentand preemptive supplemental useprovisions that persons in thosejurisdictions must abide by in additionto the Federal Insecticide, Fungicide,and Rodenticide Act.

Endangered Species Act—TheEndangered Species Act was passedin 1973 to prevent the extinction ofwildlife. Federal agencies must consultwith the USDI Fish and Wildlife Serviceon the potential impacts to listed plantsand animals and can “take” them onlyincidentally and with a permit. Privateowners are prohibited from taking athreatened or endangered species ofwildlife (vertebrates and invertebrates)but not plants. Taking is defined toinclude physical harm and harassmentto the species as well as “significanthabitat modification or degradationwhere it actually kills or injures wild-life” (16 U.S.C.S §1531). As someforest management activities havethe potential to significantly modifyor degrade habitat, this provisionhas affected both industrial andNIPF owners.

The 1982 amendments to the acthave increased the number of manage-ment options for landowners whoseproperties harbor endangered species.These amendments establish provisionsand special circumstances underSection 10 of the act that permit ataking (16 U.S.C.S. § 1539). Ownersmust first develop a detailed HabitatConservation Plan. If the Fish andWildlife Service determines that takingswhich might result from executing theplan (1) are not the purpose of the


management activity, (2) are incidentalto the management activity, and (3) willnot “appreciably reduce the likelihoodof the survival and recovery of thespecies in the wild,” they may issuean Incidental Take permit (16 U.S.C.S.§ 1539). Further refinements to thisapproach include Safe Harbor (50 CFRPart 13) and No Surprises (50 CFR Part17) initiatives that can further limitliability for participating landownersif additional endangered species arefound on their property.

State implementation of the CleanWater Act and the Coastal ZoneAct Reauthorization Amendments—The Clean Water Act has two sectionspertinent to silviculture: Section 319and Section 303(d). Section 319requires State Governors to submita report to the EPA that:

■ “identifies those navigable waterswithin the State which, withoutadditional action to control nonpointsources of pollution, cannot reasonablybe expected to attain or maintainapplicable water quality standards,”

■ “identifies those categories andsubcategories of nonpoint sources . . .which add significant pollution”to those subpar waters,

■ “describes the process . . .for identifying best managementpractices” to control thoseproblematic sources, and

■ “identifies and describes Stateand local programs for controlling”nonpoint pollution sources [33U.S.C.A. § 1329(a)(1)].

States are also required, “to themaximum extent practicable, [to]develop and implement a managementprogram . . . on a watershed-by-watershed basis” [33 U.S.C.A. §1329(a)(1)]. The act also provides thatif a State fails to submit the report, theEPA is to prepare the report and submitit to Congress. Beyond that, thereare no real sanctions. The principalmotivation for States to comply withthese requirements is a program ofgrant funds for the implementationof management programs.

States typically implement a signifi-cant part of their nonpoint-sourcepollution programs with those grantfunds from the Federal Governmentunder Section 319. Much of theactivity in those programs concernsthe encouragement of BMPs througheducational activities, technical

assistance, financial assistance, training,and demonstration projects. Somefunds are used for BMP compliancemonitoring. For example, SouthCarolina uses some of its 319 fundsfor a unique aerial surveillanceprogram that examines the State’smajor streams on a monthly basis.

The second section of the Clean WaterAct with implications for silvicultureis the “total maximum daily load”program of Section 303(d) of the act.Somewhat dormant until a round oflitigation beginning in the early 1990s,Section 303(d) requires that States:

■ identify State waters from whichpoint source effluent limitations arenot sufficient to achieve water-quality standards,

■ determine the total maximumdaily loads that would be necessaryto bring those waters up to water-quality minimums, and

■ allocate those loads among sourcesin discharge permits and State water-quality plans [33 U.S.C.A. § 1313(d)].

Little of that had happened prior tothe litigation of the past decade. Theoutcome of that litigation has been aseries of agreements and court ordersthat have imposed schedules for theidentification of the listing process andfor the process of actually allocatingloads among the various dischargers.Under those agreements and orders,States have as long as 12 years tocomplete the process (Houck 1999).Clearly, these total maximum dailyload provisions hold the potentialfor significant impact on agriculturegenerally, and silviculture specifically,but the details are still very much indevelopment. EPA guidance has arguedthat voluntary measures will be the“primary implementation mechanism”(Houck 1999). Southwide, silvicultureappears to be a minor contributor tothe problems of the waters that havebeen listed to date.

The Coastal Zone Act ReauthorizationAmendments is another interfacebetween Federal and State law withpotential impacts on silviculture. Inpassing the act to amend the CoastalZone Management Act in 1990,Congress added Section 6217 (16U.S.C. §1455b), which requires Stateswith Federally approved coastal zonemanagement programs to:

■ prepare a coastal nonpoint pollu-tion control program that includesmanagement measures to restoreand protect coastal waters from theadverse impacts of polluted runoff;

■ coordinate and integrate the Statecoastal zone management program withexisting State and local water-qualityplans and programs, particularly theState nonpoint-source managementplan; and

■ implement polluted runoffmanagement measures that areconsistent with the EPA’s “GuidanceSpecifying Management Measures forSources of Nonpoint Pollution inCoastal Waters.”

State plans under §6217 arevoluminous. To date, their impacts onsilviculture do not appear to be great,though the programs are still new.

State StatutesThe South is unique among regions

of the United States in that none ofits States has a comprehensive forestmanagement act. Florida and Virginiaachieve similar results with aggregatedindividual statutes, however. Florida’sapproach includes zoning and harvestnotification at the county level andBMPs for wildlife, water, and aestheticsat the water management districtlevel. Virginia utilizes a seed tree lawin conjunction with voluntary BMPsand regulation of loggers. Kentucky’sForest Conservation Act currentlystops short of comprehensive status.It does, however, establish guidelinesfor loggers and mandates BMPs. Withthose exceptions, few of the State-levelPR policies directly address forestry andforest management. States do, however,have regulations to protect waterquality, air quality, and endangeredspecies, and to control pesticide use.These vary in complexity and rigor.For example, not all States have a list ofthreatened and endangered species, andthose that do list species regulate forestmanagement activities that may impactlisted species only on State-ownedlands. State air quality guidelines mostoften impact silviculture by limitingprescribed burning operations.

Water-quality laws affecting silvi-culture also vary among the States.Typically, a State’s water law willprohibit pollution (variously defined)of a State’s waters, except as it isallowed under the control of a State-issued permit. Silviculture is usually


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subject to the general prohibition, but itis often specifically exempted from thepermitting requirement. Further, manyStates’ laws only make the prohibitionagainst pollution enforceable againstsilviculture operations if the conductcausing the pollution rises to a certainlevel of culpability, at least negligence.But the implementation of BMPsby a silviculture operator typicallyserves as proof that the operator hasexercised due diligence or, at least,the standard of care of an ordinaryperson, thus defeating any legal findingof negligence. Generally, however,the implementation of BMPs will notprotect against private lawsuits broughtby neighbors or downstream personswho can demonstrate that they havebeen harmed and quantify that harmin monetary terms.

In the South, forestry BMPs are mostoften voluntary, but they are mandatoryin a few States and in some specialcircumstances, such as for previousviolators or around waters of specialconcern. In some States, countieshave made BMPs mandatory. Typically,there are no preharvest notificationrequirements, and government agenciesare only able to enforce BMP or water-quality requirements by searchingout active harvesting operations. Ifviolations are found, there is oftena two-or-more-step process of tryingto remedy the problem with educationor technical assistance before sanctionsare imposed.

Variations on the typical patterninclude:

■ A noticed general permit systemin Florida, handled by five strongregional water management districts,with some prenotification requirements;

■ Kentucky’s Forest ConservationAct, which requires a master loggeron site and mandates BMPs;

■ Mandatory BMPs in some sensitiveareas (and some counties) in Georgia;

■ “Courtesy BMP exams” in SouthCarolina (exams typically result fromaerial surveillance, and can affect anoperator’s market by publishinginformation that the operator has“failed an exam”);

■ Virginia’s system that authorizesthe State Forester to issue stop-workorders to prevent water pollution;

■ Tennessee’s program that (1) makesBMPs mandatory for operators who

have previously been found responsiblefor water pollution and (2) requirespreharvest notification for 2 yearsafter an operator has been foundguilty of a violation.

Impacts of PR Policieson Private Owners

While meeting environmentaland human health goals, PR policiesreduce the working area of industrialforests, alter management strategies,and increase costs. For example,demarcating streamside managementzones and isolating endangered specieshabitat limits the amount of woodavailable for utilization. In certaininstances, management plans aredesigned to prevent areas frombecoming suitable endangered specieshabitat. Owners wishing to participatein the Safe Harbor and No SurprisesPrograms under the EndangeredSpecies Act must develop their ownHabitat Conservation Plans, whichcan be prohibitively expensive. Finally,PR policies motivate industry to initiatevoluntary self-regulation programs inan effort to stave off the implementationof additional PR statutes that mightbe less palatable.

PR policies also have the potentialto reduce working area and raise costsfor NIPF owners. Some owners areimpacted considerably more thanothers depending on the size, location,and environmental attributes of theirproperty as well as their managementobjectives. Obviously, people who holdproperty mainly for its amenity valuesare affected less than those seeking tomaximize the amount of income theycan receive through the sale of wood.

AcknowledgmentsStudents at the Tulane University

School of Law who aided this workare Liat Amsily, Adam Baron, EllenCogswell, Brian Johnson, and SashaPhilip. Further assistance was providedby numerous State forestry andenvironmental officials who patientlyexplained the details of their States’water law and BMP programs.

Local Forest-RelatedOrdinances

IntroductionIn recent years, society’s environ-

mental sensitivity has increased,urbanites unfamiliar with the role ofnatural resources in the rural economyhave migrated into rural areas, andgrowing cities have endeavored tomaintain green space (Egan and Luloff2000, Johnson and others 1997, Martusand others 1995). These trends haveprompted local governments to adoptordinances intended to protect theenvironment, aesthetics, open space,and public safety. These regulationsinfluence how forest managers canoperate on private land.

The effects of local ordinances onforest management are of concern toforestry professionals and forest owners.In addition to increasing forest owners’operating costs, regulation can createa patchwork of confusing, sometimesconflicting, requirements betweendifferent units of government (Martus1992, Martus and others 1995,Provencher and Lassoie 1982, Shaffer1991). Analysis of the impacts oflocal ordinances requires a firmunderstanding of their characteristics.

A study undertaken a decade agoidentified units of local governmentthat had enacted ordinances (Greeneand Haines 1994, Martus 1992). Thestudy also determined the provisionsof each ordinance and categorizedthem by type. The current study wasdesigned to update the earlier effort.

MethodsNo centralized reporting system for

county and municipal ordinancesexists, so local forest-related ordinanceswere compiled from a variety ofsources. The units of local governmentidentified by Martus (1992) werecontacted to find out whether theyhad enacted new ordinances. At thesame time, the responding officialswere asked for information on othercounties or municipalities they wereaware of that had enacted forest-related ordinances. Authors of articleson local regulation, representativesof the forestry agencies and forestryassociations in each Southern State,extension foresters, university facultymembers, consulting foresters,

Chapter 8: Policies, Regulations, and Laws 215SOCIALTable 8.6—Number of forest-related

local ordinances in the South, byState, 1992 and 2000

Year

State 1992 2000

- - - - Number - - -

Alabama 0 6Arkansas 3 6Florida 26 46Georgia 41 116Kentucky 0 0Louisiana 25 52Mississippi 1 7North Carolina 1 16Oklahoma 0 0South Carolina 0 9Tennessee 0 0Texas 0 11Virginia 44 77

Total 141 346

Year

Type of ordinance 1992 2000

No. % No. %

Timber harvesting 8 6 35 10Public property protection 59 42 158 46Tree protection 11 8 48 14Environmental protection 19 13 26 8Special feature protection 44 31 79 22

Table 8.7—Number of forest-related ordinances enacted in the South,by type, 1992 and 2000

and other members of the forestrycommunity also were contacted andasked for information on ordinancesthey were aware of. This processwas continued until all leads wereexhausted. Once identified, theunits of government were contactedto obtain a copy of each ordinance.

Data SourcesData for the study consisted of

any law, ordinance, zoning provision,or other enactment that had been orcould reasonably be used to restrictlogging or silvicultural activities. Eachenactment was examined to determine

its date of adoption, regulatoryobjective, and provisions.

Results—Numberof Ordinances

The Martus (1992) study identified141 local ordinances in 7 of the 13Southern States (table 8.6). Of the 135units of local government that hadenacted ordinances, 87 percent werecounties or parishes. Four States—Virginia, Georgia, Florida, andLouisiana—accounted for 96percent of the ordinances.

The current study found thatthe number of local ordinances inSouthern States more than doubledbetween 1992 and 2000. The studyidentified 346 forest-related ordin-ances distributed among 264 unitsof local government in 10 SouthernStates (table 8.6). Of the enactinggovernments, 83 percent werecounties or parishes. The proportionof ordinances passed by city govern-ments increased from 8 percent of thetotal in 1992 to 13 percent in 2000.Neither study identified any localforest-related ordinances in Kentucky,Tennessee, or Oklahoma.

Of the 346 provisions, 341 hadidentifiable dates of enactment. Ofthese, 80 percent had been enactedin the last 10 years and 44 percentwithin the last 5 years (table 8.7).Thus, the number of local forest-related ordinances has essentiallydoubled every 5 years since 1970.

There are several reasons for theproliferation of local ordinances,including urban sprawl, exurban-ization, social conflict, communitymobilization, and protection of public

investments. In addition, 18 percentof the ordinances resulted from Statemandates. Virginia required localgovernments to enact watershedpreservation ordinances pursuantto the Chesapeake Bay PreservationAct. Similarly, Florida mandated thatcounty governments implement landdevelopment codes, some of whichhave silvicultural implications.

The “National Resources Inventory,”published in December 1999 by theUSDA Natural Resources ConservationService, reports that, on a nationalscale, forest acreage is declining ata rate of over 3 million acres per yeardue to urban sprawl. Urbanizationis a major contributor to theproliferation of local ordinancesin the form of tree protection andtimber harvesting statutes.

Not only are cities expanding, buturban residents are migrating to ruralareas seeking an improved lifestyle.This exurbanization introduces bothsocial conflict and communitymobilization as former city dwellers,unfamiliar with the role of naturalresources in the rural economy, reactstrongly to the unpleasant appearanceof harvested areas (Glickman 1999,Provencher and Lassoie 1982).Applying community organizationand lobbying practices they are familiarwith, the new residents press forordinances to protect the sylvan settingthey sought in moving from the city,with little regard for the effectivenessor impact of the ordinance on thetraditional rural economy.

Many States in the Southhave a decades-old tradition ofordinances to protect publicinvestments in roadways. The earliestidentified ordinance was enactedin 1934 to protect parish rights-of-way and ditches from logging debrisin Louisiana. Public protectionordinances remain the focus of localregulation in much of the South.

Regulatory objectives—Thestated objectives of local ordinancesprovide insight into the attitudesof the adopting government and itsconstituents. Each ordinance identifiedin the study was placed into one offive categories:

1. Timber harvesting—Timberharvesting ordinances are adoptedspecifically to restrict forestry andsilvicultural operations. All ordinancesthat referred to regulation of timber


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harvesting, skid trail and haul roadconstruction, harvest methods, equip-ment, or any other silvicultural activityon private property were placed in thiscategory. Common provisions includerequiring management plans, harvestpermits, adherence to State BMPs,and streamside management zones(SMZs). Of the ordinances identifiedin the study, 10 percent were in thiscategory in 2000 (table 8.7).

2. Public property protection—Ordinances in this category areenacted to protect public investmentsin roadways and bridges and toprotect the safety of the travelingpublic. They place operating limits onheavy vehicles, including log trucks;prohibit accumulation of mud anddebris on roadways; restrict interferencewith traffic flows; and protect againstdamage to roads, bridges, and culverts.Typical requirements include theposting of surety or cash bonds, haulingpermits, placement of culverts incounty ditches, and posting of warningsigns at points of egress. Localordinances in many areas of theSouth emphasize protection ofpublic property and safety. Of the346 ordinances identified, 46 percentwere in this category (table 8.7).

3. Tree protection—Tree protectionordinances are associated withpreservation of trees in areas thatare being cleared for development.Common provisions include requiringtree-cutting permits, managementor erosion-control plans, basal-arearetention thresholds, replanting, anduse of buffer strips. Landscaping lawswere beyond the scope of the study. Ofthe ordinances identified, 14 percentwere in this category (table 8.7).

4. Environmental protection—The purpose of ordinances in thiscategory is to protect the generalenvironment from land disturbingactivities. Common provisions includerequiring harvesting permits, soilerosion plans, use of SMZs, and bufferstrips. Less than 10 percent of theordinances identified were in thiscategory (table 8.7).

5. Special feature protection—Special feature protection ordinancesare adopted to protect specific areasthat have scenic or environmentalvalues. Examples are scenic rivercorridors, highway overlay districts,wetlands, view sheds, and special

was effectively nullified by a recentState Supreme Court case (Ann F.Dail et al. v. Record No. 991591,April 2000). Local governmentsin that State now have court-issuedauthority to enact forest-relatedordinances they deem justifiable.

■ State forestry associations—In someinstances, State forestry associationshave succeeded in preventing adoptionof local ordinances. For example, theMississippi Forestry Association hasorganized county forestry associationsthat keep members aware of localproblems and mobilize them to actpromptly. The success of this approachis reflected in the relatively low numberof local ordinances in Mississippi.In other instances, State associationshave promoted an outcome-basedapproach to regulation as more effectiveand less costly than a process-basedapproach. Once ordinances are passed,State associations work through theirlegislative committees to ensure theyare implemented fairly and efficiently.

■ County road commissions—A little-used but effective strategyfor preempting enactment of publicproperty protection ordinances isthe use of a county road commissioncomposed of road superintendents,loggers, and foresters. Macon County,AL, for example, uses such a systemto prevent roadway damage by havingthe forest industry supervise itself.If a problem arises, the commissionworks to correct it in a timely mannerin order to avoid county interventionand the possibility of regulation.

■ Private forestry interests—Forestproducts companies as well as NIPFowners are affected by local ordinances.Many firms utilize their forestersto keep track of local governmentsthat show interest in developingordinances. Action can then betaken to voluntarily correct problemsbefore they lead to regulation.

In a few highly publicizedcases, industry firms have soldlarge tracts of forest land toenvironmental organizations, landtrusts, or government agencies.Examples include:

■ The 1999 sale of 300,000 acresof Champion International land inthree Northeast States to a coalitionof organizations led by The Conser-

habitats. Common provisions includeprohibiting tree cutting or requiringtree-cutting permits, requiring use ofbuffers, and notification of the localgovernment. Over 20 percent of theordinances identified in the studywere in this category. Most werepassed in Virginia, as mandatedby the Chesapeake Bay ProtectionAct (table 8.7).

The focus of local regulation variedby State. Public property protectionordinances made up the majority oflocal regulations in Texas (55 percent),Alabama (67 percent), Georgia (72percent), Arkansas (83 percent),Louisiana (86 percent), and Mississippi(100 percent). Tree protection lawsdominated in North Carolina (40percent), Florida (41 percent), andSouth Carolina (56 percent). Specialfeature protection ordinances mandatedby the Chesapeake Bay Protection Actaccounted for 78 percent of local forest-related ordinances in Virginia.

Preemptive/Preventive measures—Local ordinances affect the managementalternatives available for privateforests. By and large, the forestrycommunity has responded byemphasizing ethical and stewardship-based forest management and bymeeting with interested membersof conservation groups, communityorganizations, and elected officialsto show them what this approach tomanagement looks like on the ground.By these activities, members of theforestry community seek to encouragethe perception that further regulationis unwarranted. The study’s datacollection process, however, revealedthat a variety of other, more proactiveapproaches have been used toprevent or preempt local regulation.

■ State right-to-practice-forestrylaws—State right-to-practice lawsattempt to ensure that forest ownerscan continue to grow and harvesttimber by limiting the ability of localunits of government to restrict forestrypractices. Kentucky, Louisiana, NorthCarolina, and Virginia have passedright-to-practice legislation. Kentucky’slaw appears to be the most successfulin preempting local forest-relatedordinances, since the study identifiedno such ordinances in that State.In contrast, the North Carolina lawsimply protects forestry from beingclassed as a “nuisance” activity inlocal ordinances. The Virginia law


associated with the proliferation oflocal regulation, both overall and bytype of ordinance. The analysis shouldalso indicate underlying rationales forthe proliferation of local ordinancesand provide a focus for future study.

AcknowledgmentsThis study was supported by

the USDA Forest Service, SouthernResearch Station. The authors areTechnical Forester, Rayonier SoutheastForest Resources, Fernandina Beach,FL; Garland Gray Professor of Forestry,Department of Forestry, VirginiaPolytechnic Institute and StateUniversity, Blacksburg, VA; andResearch Forester, Forest ResourceLaw and Economics Research Unit,USDA Forest Service, SouthernResearch Station, New Orleans,LA, respectively. At the time thestudy was conducted Mr. Spinkwas a graduate research assistantat the Department of Forestry,Virginia Polytechnic Institute andState University, Blacksburg, VA.

Private PropertyRights and Right-to-

Practice-Forestry Actsin the South

IntroductionSince the 1980s, local governments

in the South have been enacting agrowing number of ordinances thatrestrict forest practices. Historically,most local ordinances have beendeveloped to protect the infrastructure,such as roads and bridges, but anincreasing number are being directedat forest land management activities—timber harvesting practices, inparticular. The previous section notedthat there were 141 ordinances in theSouthern States in 1992, 346 in 2000.

Local regulation, coupled withFederal and State laws and regulationsenacted to control nonpoint-sourcewater pollution or to protect wetlands,air quality, endangered species, andscenic waterways increasingly limitlandowners’ management options.The cumulative effect of this regulationis a complex environment in whichto practice private forestry, andmany southern landowners havereacted negatively.

vation Fund of Arlington, VA (TheConservation Fund 1999);

■ The 2001 sale of 57,000 acres ofRayonier land in northeast Florida toState agencies in a deal brokered by TheNature Conservancy, to create a wildlifecorridor between the Osceola NationalForest and the Okefenokee NationalWildlife Refuge (Rayonier 2001); and

■ The recently announced sale of100,000 acres of Weyerhaeuser land inWashington to Evergreen Forest Trust,to protect forest land near Seattle fromdevelopment pressure (Society ofAmerican Foresters 2002).

Such sales protect the rural characterof the forest land involved, slow theinception of regulation associated withurban expansion, and enhance publicperception of the firms as goodenvironmental citizens.

Discussion and ConclusionsLocal regulation of forest activities has

increased dramatically in recent years.The overall number of forest-relatedordinances passed by local governmentsin the South increased from 141 in1992 to 346 in 2000. Local ordinancesoccur in every Southern State exceptKentucky, Oklahoma, and Tennessee,but they are especially prevalent inGeorgia, Virginia, Louisiana, andFlorida.

The mix of ordinances varies byState, but regionwide, public propertyprotection ordinances are the mostcommon, accounting for nearly halfof all ordinances. Special featureprotection ordinances are the nextmost common, followed by treeprotection ordinances, timberharvesting ordinances, and generalenvironmental protection ordinances.All types of ordinances increased innumber between 1992 and 2000,but the relative proportion of publicproperty protection, tree protection,and timber harvesting ordinancesincreased somewhat, while the relativeproportion of special feature andenvironmental protection ordinancesdecreased. The proportion of forest-related ordinances passed by citygovernments also increased overthe period.

Ordinances impact how forestmanagers can operate on privateproperty. Ordinances do more thanrestrict forest management practices;they also increase operating expenses,

reduce timber stumpage values, andcreate a patchwork of conflictingrequirements across the landscape.These effects may be magnified inthe South due to (1) the simultaneoustrends of population growth and theshift of timber demand to the region,and (2) the importance of forestindustry to Southern States andlocal economies (Cubbage 1991).

It seems likely that the numberof public property protection ordin-ances will level off in the future. Thenumber of special feature protectionordinances—mandated by State law toprotect specific scenic or environmentalfeatures—may also remain relativelyconstant. Given the rapid rate of urbanexpansion, however, there is littlereason to believe that proliferationof the other types of local ordinanceswill slow.

Approaches that have been used toavert enactment of new forest-relatedregulations in local areas includeemphasizing ethical, stewardship-basedforest management; education andmobilization of private forest owners byState forestry associations; cooperationamong road officials, loggers, andforesters on county road commissions;and tracking and lobbying effortsby forest industry firms. Withoutsuccessful amelioration measures,it will become impractical to practiceforest management in increasinglylarge areas of the South. This conditionmay lead to additional large-scalesales of forest industry land toenvironmental organizations, landtrusts, and government agencies orto State intervention in the form ofright-to-practice-forestry laws orpreemptive forest management acts.


The demographic and resourcefactors associated with localitiesexperiencing rapid growth in forest-related ordinances need to bedetermined. The remaining objectiveof such a study should be to examinethe correlation between such localitiesand measures of population—number,growth rate, education, income, anddiversity, for example—and resourceavailability. Statistical analysis anda Geographic Information System willbe used to seek insight into the factors


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Table 8.8—Private property rights protection and right-to-practice forestry laws, dates of proposedand enacted legislation

Types of laws

Real property takings Farm and forest land Right to farm and Right to prescribe burnState compensation/assessment compensation/assessment practice forestry and limit liability

Alabama Proposed 1995, 1997 Enacted 1995Arkansas Proposed 1995, 1999Florida Enacted 1995 Enacted 1979 Enacted 1990Georgia Enacted 1995 Enacted 1992Kentucky Enacted 1996Louisiana Enacted 1995 Enacted 1993Mississippi Enacted 1994 Enacted 1994 Enacted 1992North Carolina Proposed 1995 Enacted 1991 Enacted 1999Oklahoma Enacted 2000South Carolina Proposed 1995 Enacted 2000 Enacted 1994Tennessee Enacted1982Texas Enacted 1995 Enacted 1999Virginia Enacted 1995 Enacted 1994, 1997 Enacted 1997

In addition to regulatory restrictions,forest land use has been increasinglysubject to litigation claiming forestryactivities constitute a nuisance, partic-ularly in wildland-urban interfaces.Both regulation and nuisance claimsare symptomatic of clashing urbanand rural values in areas traditionallydevoted to timber growing.

In response to increasing regulatorypressures and in concert with a growingnational property rights movement, fiveSouthern States have enacted propertyrights protection laws that: (1) requirean evaluation by government agenciesof proposed regulations for privateproperty rights implications; and/or(2) provide a mechanism to compensatelandowners for losses in property value.In addition, eight Southern States haveenacted right-to-practice-forestry lawsto protect landowners from nuisanceactions for farm and forestry operationsand to restrict the enactment of localordinances restricting silviculturalpractices. Legislation specific to thepractice of prescribed burning has alsobeen implemented in nine SouthernStates. These laws shield burnersfrom nuisance suits and limit theirliability for damages and injuries relatedto fire escapes and smoke intrusions.

Methods and Data Sources

This study is an update to researchconducted by Haines (1995). Methodsincluded standard legal researchtechniques. The primary source ofinformation was the statutory codeof each of the Southern States. Inaddition, forestry associations andforestry agencies in each State werecontacted to obtain information aboutthe current status of private propertyrights protection and right-to-practice-forestry laws enacted or proposedsince 1995 when the Haines paper waspublished. The information providedincluded State statutes, supportingdocuments, position statements,and relevant published materials.

ResultsIn the South, four types of laws

protect landowners’ property valuesand promote the use of forest landfor personal, societal, and ecologicalbenefits. These include: (1) compre-hensive property rights protection laws,(2) private property protection lawsspecific to agricultural and forest lands,(3) right-to-farm and right-to-practice-forestry acts, and (4) right-to-practicelaws for specific forest activities, whichso far have been limited to prescribedburning (table 8.8).

Comprehensive property rightsprotection laws—Comprehensiveproperty rights protection laws makeexplicit the constitutional right toown and use property for a broadrange of purposes; they create a legalremedy for landowners to recoverlosses in property value that resultfrom government regulation. Inaddition, some of these acts requiregovernment entities to conduct aneconomic impact assessment ofproposed laws or regulations thatare likely to result in reductions ofprivate property values. Most of themomentum to pass these laws occurredin the mid-1990s. Comprehensiveprivate property rights protection lawswere enacted in Florida, Texas, andVirginia in 1995. In the same year,bills were proposed but failed topass in the legislatures of Alabama,Arkansas, North Carolina, and SouthCarolina. Legislation was againproposed in Alabama in 1997 andArkansas in 1999, but failed again.

The enacted laws either provide forlandowner compensation (Florida),analysis of economic impact (Virginia),or both (Texas). The Florida law doesnot provide a specific threshold fordiminution (loss) of property valuefor landowner entitlement tocompensation. Instead, subjectiveterminology is used as the measure


of reduction in property value.Landowners must be “inordinatelyburdened” by government regulation.The Florida act also creates an optionalmediation process that landowners mayuse to instigate a review of regulatoryactions without filing a lawsuit.

The Texas law sets a threshold forcompensation of property value lossat 25 percent. In addition, the Texaslaw requires government agencies toperform an impact assessment for anynew laws, regulations, or ordinancesthat are likely to reach the 25 percentthreshold to determine potential costsin landowner compensation, andto identify alternative solutions thatwould have less impact on privateproperty rights.

The Virginia statute requires the StateDepartment of Planning and Budget toconduct an economic impact analysison the use and value of private propertyfor proposed State legislation.

Laws to protect agricultural andforest land use—Laws to specificallyprotect agricultural and forest landuse have been enacted in Mississippi(1994) and Louisiana (1995). Theprovisions of these acts are similarto the more comprehensive propertyrights protection laws. The takingsthreshold for diminution of agricul-tural or forest land value is 20percent in Louisiana and 40 percentin Mississippi. The loss must beestablished for landowners to file claimsfor compensation. Louisiana’s law alsorequires an impact assessment for anyproposed government regulations orlocal ordinances that may result in adiminution in the value of forest land.

Right-to-farm and right-to-practice-forestry laws—Laws that establish theright to farm and practice forestry byprotecting landowners from nuisancesuits were enacted between 1991 and2000 in eight States: Florida, Georgia,Kentucky, Mississippi, North Carolina,Oklahoma, South Carolina, andVirginia. These acts recognize thatagriculture and forestry are importantto the economy and environment of theStates, and that silvicultural practicesmay be discouraged by: (1) public andprivate nuisance actions, and (2) localordinances and zoning regulations.

In general, these laws provide thatagricultural and forestry activities thathave been in existence for 1 year ormore and are located in designated

agricultural zones are protected fromnuisance suits. An amendment to theVirginia law in 1997 expanded theprotected area in that State beyondagricultural zones to include all areaslegitimately used for forestry purposes.

Protection from these legal actionsdoes not apply to operations conductedin a negligent or improper manner. Infact, the South Carolina, Florida, andVirginia acts specify that State BMPsmust be implemented for landownersto be shielded from nuisance claims.

To varying extents, these acts alsolimit the power of local governmentsto adopt zoning regulations orordinances that restrict or prohibitagricultural or forestry operations.Local restrictions that have promptedthese provisions include: assessmentsof harvesting fees, requirements forpublic hearings and permits to harvest,outright prohibitions of harvesting,buffer and other requirements ex-ceeding State BMPs, and prohibitionson prescribed burning.

A slightly different approach forlegitimizing farm and forest practiceswas initiated in Georgia. Legislationwas enacted there in 1995 to protectfarm and forest practices through adeed notification requirement. Underthis law, property owners mustnotify purchasers or lessees thatthe property they are acquiringlies within agricultural zones, thatcustomary agricultural and forestuses of neighboring land may resultin discomfort or inconvenienceto them, and that these agriculturaland forestry operations are permittedby law provided they conform withaccepted standards and laws.

In 1994, in an opinion of theTennessee State Attorney General,counties were determined to beprohibited from using zoning authorityto regulate the clearcut method ofharvest. The Attorney General basedthe opinion on the State’s Right toPractice Agriculture Law (1982),which defines the term “agriculture”to include forestry operations; thedefinition is the only reference toforestry in the law. Although anopinion is not binding, the findingsof the Attorney General stymiedthe implementation of localordinances in Tennessee.

Silvicultural operations may besimilarly afforded protection from

nuisance claims in other States’ right-to-farm acts as well. The interpretationof forestry operations as a componentof agricultural activities or farmingin these laws may provide additionalprotection of landowners’ rights topractice forestry.

However, in contrast to the Tennesseeopinion, the Virginia Supreme Courtissued a very narrow ruling regardingthe State’s Right to Practice ForestryLaw in April 2000 (Ann F. Dail, et al. v.York County et al. Record No. 991591).In this case, the landowner appealedlocal restrictions on clearcutting andbuffer requirements in excess of StateBMP standards and required approvalof a forest management plan by YorkCounty. The Court ruled that: (1)approval of a management plan doesnot constitute a permit, which isprohibited by the State Right toPractice Forestry law; (2) State BMPsare voluntary and, therefore, countiescould enact more stringent bufferrequirements; and (3) local authoritiescould restrict the method of harvest,provided all harvesting was notprecluded. The impact of this rulingin Virginia could be far reaching; some48 local governments have ordinances,permit fees, or restrictive requirementsfor forestry. In addition, forest land inVirginia is being converted to otheruses at a rate of about 50,000 acres peryear (Forest Council of Virginia 1996).

Right-to-practice-prescribed-burning acts—In the past 10 years,nine Southern States have enactedlegislation to authorize and promotethe continued use of prescribedburning of forest land by limitingburners’ civil liability for damages orinjuries resulting from fire or resultantsmoke and providing protection fromspurious nuisance suits. These lawsdefine prescribed burning as a legaland socially beneficial activity thatshall not be deemed a nuisance.These statutes were enacted in 1990in Florida, in 1992 in Georgia andMississippi, in 1993 in Louisiana, in1994 in South Carolina, in 1995 inAlabama, in 1997 in Virginia, and in1999 in North Carolina and Texas.

Three conditions must be met beforeburners can be afforded the liabilityprotection established in these acts.The first condition is the presence ofat least one certified burner at all timesuntil the burn is completed. In Georgia,the burn manager does not have to


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be certified but must have burningexperience. The second conditionis the development of a written fireprescription or plan. The thirdis adherence to the rules andnotification and permit proceduresestablished under other laws.

In the past, burners have beenshielded from liability under these laws,provided any damages or injuries werenot a result of negligence. However,to further encourage burning in theirStates, the legislatures of Georgia andFlorida have recently amended theirlaws to further shield burners fromliability. Under these amendments,burners are liable only for damages orinjuries resulting from gross negligence,a lesser degree of responsibility. In legalproceedings, the expanded protectioncould be crucial to burners. InMississippi, an effort is underwayto similarly broaden protection.

The Texas law is the only prescribedburning protection act that addressesinsurance coverage for burners; onlyburners with $1 million of liabilitycoverage are afforded protection.

ImplicationsPrivate property rights protection

and right-to-farm and right-to-practice-forestry acts are an attempt to providean equitable balance between the goalsof society and the constitutional rightsof private landowners to manage theirland for personal benefit. These lawsprovide safeguards for protecting thepublic from practices conducted ina negligent manner while protectinglandowners’ property rights andencouraging sustainable forestmanagement practices. Since mostof this legislation has been passedin recent years, the impact on theoperational environment for forestryis unclear.

As previously discussed, the findingsof the Tennessee Attorney General inhis opinion and the decision of theSupreme Court in Virginia regardingthe power of local governments toregulate forest operations are in sharpcontrast. Legal interpretations throughthe courts in each State will likelyplay a pivotal role in determiningthe impact of these laws.

AcknowledgmentsThe executive directors of the

Southern State forestry associationswere key contributors to this study.

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The USDA prohibits discrimination in all its programsand activities on the basis of race, color, national origin,sex, religion, political beliefs, sexual orientation, ormarital or familial status (Not all prohibited bases applyto all programs). Persons with disabilities who requirealternative means for communication of programinformation (Braille, large print, audiotape, etc.) shouldcontact the USDA's TARGET Center at 202-720-2600(voice and TDD).

To file a complaint of discrimination, write USDA,Director, Office of Civil Rights, Room 326-W, WhittenBuilding, 1400 Independence Avenue, SW, Washington,DC 20250-9410 or call 202-720-5964 (voice and TDD).USDA is an equal opportunity employer.

In: Wear, David N.; Greis, John G., eds. 2002. Southern forest resourceassessment. Gen. Tech. Rep. SRS-53. Asheville, NC: U.S. Departmentof Agriculture, Forest Service, Southern Research Station. 635 p.

The southern forest resource assessment provides a comprehensiveanalysis of the history, status, and likely future of forests in the SouthernUnited States. Twenty-three chapters address questions regarding social/economic systems, terrestrial ecosystems, water and aquatic ecosystems,forest health, and timber management; 2 additional chapters provide abackground on history and fire. Each chapter surveys pertinent literatureand data, assesses conditions, identifies research needs, and examinesthe implications for southern forests and the benefits that they provide.

Keywords: Conservation, forest sustainability, integrated assessment.

chapter 8 (socio-3): policies, regulations, and laws

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